Argentina’s Senate gave the green light to a landmark deal to repay creditors holding defaulted debt in the early hours of Thursday, marking the end of a 14-year legal battle that had made the country a global financial pariah.
The deal, which had already been approved by the lower house of Congress, is the cornerstone of new President Mauricio Macri’s plan for revitalizing an economy hobbled by low investment, high inflation and precarious central bank reserves.
Senators across the political divide voted by a 54 to 16 margin in favor of the deal after a 14-hour-long debate that dragged on beyond midnight.
Cash-strapped provincial governors who see it as key to regaining access to financing had lobbied hard in favor of the package. Now, Macri must simply sign the deal into law.
“What we are doing is resolving the topic of debt, we are not increasing debt, we are closing a judicial question,” said Miguel Pichetto, head of the opposition Victory Front party in the Senate, who voted in favor of the deal despite coming under attack from some members of his own party.
The country has until April 14 to pay $4.65 billion to the main hedge funds that fought for and won an advantageous settlement after balking at steep payment reductions offered in Argentina’s 2005 and 2010 bond revamps.
A U.S. court ordered Argentina to negotiate a settlement, which should set the stage for the country to once again issue global bonds.
Locked out of the capital markets since its 2002 default, Argentina needs international financing to close its wide fiscal deficits, improve infrastructure and start rebuilding investor confidence.
The deal allows Argentina to issue up to $12.5 billion in new bonds. Smaller funds have also joined the suit over the years and the final tally for settling the dispute is unknown.
Appeals being heard in U.S. federal courts could push back the April 14 deadline for payment to the funds, but are not expected to derail the process.
Money left over from the bond issuance would give financial breathing room to Macri as he carries out free-market reforms and starts paying down deficits run up by previous Argentine leader Cristina Fernandez, who left office in December after eight years of free-spending populist rule.