Argentina's Macri faces first test in Congress with creditors deal

Reuters News
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Posted: Mar 01, 2016 8:46 AM

By Hugh Bronstein and Gabriel Burin

BUENOS AIRES (Reuters) - Argentine President Mauricio Macri on Tuesday will urge Congress to swiftly approve a landmark deal reached with creditors over defaulted debt in a race to comply with a U.S. court deadline.

Macri, who will address Congress for the first time, is likely to cobble together the votes needed to implement the deal announced on Monday to pay $4.65 billion in cash to its main "holdout" creditors, ending 14 years of legal battles.

The question is whether Congress will pass the deal before an April 14 deadline set by the U.S. court hearing the case.

Argentina must settle the case in order to get financing from the international capital markets needed to launch Macri's economic recovery program. Elected in November on a free markets platform, he has lifted many of the controls that previous President Cristina Fernandez had put on the economy.

Miguel Angel Pichetto, a leader of moderate Peronists in the Senate, said the proposal will not go to an immediate vote.

"The bill has to be studied carefully," he said, adding that he is likely to vote in favor.

Provincial governors, desperate for money needed to restore crumbling roads, are lobbying the Senate in favor of the deal.

But Senator Maria de los Angeles Sacnun, a staunch Fernandez ally, called the deal "an intrusion of our sovereignty."

The U.S. judge hearing the case said last month that he wants Congress to repeal the law banning the government from offering better terms than those included in Argentina's 2005 and 2010 debt restructurings. The holdouts rejected those restructurings and sued for full repayment in the U.S. courts.

The government wants to issue two or three new sovereign bonds on international markets for a total of up to $15 billion in April if lawmakers were swift in backing the accord.

Inaugurated in December, former Buenos Aires mayor Macri inherited a gaping budget deficit that Fernandez financed with central bank reserves while the economy was weighed down by sweeping trade and currency controls.

Analysts and administration officials say he can get the support he needs in the lower house of Congress, where his coalition has the biggest minority and no party has a majority. Fernandez's allies will nonetheless put up a fight.

"Now the extortion has been put before Congress," house member Axel Kicillof, who served as Fernandez's economy minister, wrote in an editorial.

(Reporting by Hugh Bronstein Editing by W Simon)