BUENOS AIRES: Argentina's lower house of Congress was expected to approve a settlement with creditors over the country's defaulted debt this week, a deal that the new president calls the cornerstone of his plan for reactivating Latin America's No. 3 economy.
The pact aims to close a chapter in Argentina's history that started with its 2002 default on $100 billion in sovereign debt and sparked 14 years of lawsuits that have hamstrung the country's finances by keeping it locked out of the bond market.
President Mauricio Macri, elected in November on a free-markets platform after 12 years of leftist rule, said he was sure Congress will approve the deal.
Due in part to the previous president's refusal to negotiate with Argentina's creditors, he inherited an anemic economy beset by wide government deficits. The lower chamber started debating the bill on Tuesday.
"We have managed to reach a strong consensus regarding the basic provisions of the law," said Mario Negri, lower chamber leader of Macri's Let's Change party.
The opposition, led by former Economy Minister Axel Kicillof, said that by proposing repayment terms of 70 to 75 cents on the dollar, the pact would give too much to hedge funds that sued Argentina after rejecting about 30 cents on the dollar offered in the country's 2005 and 2010 bond revamps.
"It's easy to settle by giving the vulture funds everything they want," Kicillof said during the debate. Macri was nonetheless expected to assemble the votes he needs to get the deal passed by Wednesday.
It would then go to the Senate, where provincial governors have lobbied for the bill as a way of opening credit needed to rebuild crumbling roads throughout the Pampas grains belt. Macri took office promising to bolster an economy hobbled by heavy state controls.
Gross domestic product shrank by 3.5 percent in the last quarter of 2015, while the full year's primary fiscal deficit grew to 5.4 percent of GDP.
In his first days in office Macri floated the local peso currency, cut trade barriers and grains export taxes and eliminated thousands of public jobs in his quest to cut state spending while stimulating growth.
If he succeeds, Argentina could become a bright spot in an emerging markets landscape blighted by Latin American corruption scandals, slower commodities demand from China and fear that higher US interest rates could push investment out of developing countries and toward the dollar.
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