February 7, 2016
With this move the new neoliberal government is seeking to end the legal conflict that according to them keeps the country out of international capital markets.
The government of the conservative Argentine President Mauricio Macri has reaffirmed its proposal to pay US$6.5 billion in cash to holdout creditors, commonly referred to as the vulture funds, in a bid to end a decade-long legal dispute.
This figure is barely the 25 percent of the total of US$9 billion debt, but finance secretary Luis Caputo, who made the proposal on Friday after five days of negotiations in New York, is very optimistic about his proposal and said some creditors have already accepted it.
IN DEPTH: Vulture Funds
With this move the new neoliberal government is seeking to issue new debt securities to raise cash and pay the holdout hedge funds led by NML and Aurelius, “to overcome the conflict” that according to them “keeps the country out of international capital markets.”
During his election campaign, Macri vowed to reach an agreement with holdout creditors that sued the country for more than US$1 billion after the country defaulted on its debt in 2001.
In July 2014, U.S. Federal Judge Thomas Griesa controversially blocked a deposit of US$539 million from the Argentine government, instead demanding holdout claims be paid in full. Shortly afterwards, the government of then president Cristina Fernandez declared a “partial default” despite showing the will and capacity to pay 90 percent of its creditors on a month by month basis.
The financial policies adopted by Fernandez and her late husband Nestor Kirchner were aimed at confronting and battling the vulture funds and Wall Street financial interests. They always questioned the holdouts’ actions and were supported by several world leaders, well-known economists, other countries, and even the United Nations, which created a new legal framework for sovereign debt restructuring to limit the actions of the vulture funds.
Argentina under the Kirchner-Fernandez leadership brought to the South American country development, industrialization, scientific and technological advances. However, the Macri administration has shown in the first two months a series of aggressive neoliberal policies that many say will reverse the economic, social and political gains from his last two predecessors.