BUENOS AIRES, Argentina – Argentine legislators on Tuesday began considering the government's proposed deal with a group of U.S. creditors that is intended to end the long fight that has kept the South American nation on the margins of international credit markets.
The agreement reached late last month must be approved by both houses of Argentina's Congress.
As members of the lower house debated the deal, protesters gathered outside Congress to voice disapproval. It was unclear whether the chamber would vote on the legislation Tuesday. If it passed, it would then go to the Senate for consideration.
"It's not about assigning blame for the debt but rather finding solutions right now," Luciano Laspina, a lower house deputy and president of the budget commission, said as the debate got started.
Axel Kicillof, who served as economy minister in the previous administration and is now a congressman, didn't see it that way. He said the new government negotiated a bad deal and did it "in hasty conditions."
President Mauricio Macri assumed power in December after campaigning on promises to modernize Latin America's third-largest economy in part by solving the dispute. Former President Cristina Fernandez refused to negotiate, calling the creditor groups "vultures" while arguing it was an issue of national sovereignty.
Under the deal, Argentina would pay $4.653 billion to resolve all related claims, including those from billionaire Paul Singer's group in New York and other creditors around the world. The agreement would pay the funds managed by Elliot, Aurelius Capital, Davidson Kempner and Bracebridge Capital about 75 percent of their full judgments, according to the statement.
The conflict has its origins in Argentina's 2001-2002 financial collapse, when it defaulted on $100 billion in bonds. Most creditors renegotiated in bond swaps in 2005 and 2010. But a group of creditors led by Singer refused to take lower-value bonds. They took Argentina to court in New York, under whose laws the debt was issued, and won.
In recent years, U.S. District Court Judge Thomas Griesa in New York repeatedly ruled against Argentina, saying the country had to pay the holdouts before it could pay other creditors holding renegotiated debt. Those rulings have kept Argentina from accessing international credit markets, forcing it to issue domestic bonds to raise funds and search for backdoor financing from countries like China.
Beyond approving the deal, legislators would also need to revoke or sharply modify two laws that in practical terms would make the agreement difficult to implement.
The "Lock Law" prevents Argentina from offering one group of creditors a better deal than others and the "Sovereign Payment Law," passed in 2014, allowed Argentina to pay creditors with renegotiated debt in the face of the New York court order not to do so.