The head of the Renewal Front (FR) Sergio Massa has said that he will support the government’s bill in Congress to pay off the holdouts suing the country over defaulted bonds because Argentina “absolutely has to get out of its default,” but his party is proposing changes to the bill to “avoid future headaches.” Massa’s support in Congress is significant because he is a Peronist, and caucuses (political groupings in Congress that vote along the same lines) from this political sector — especially the Victory Front (FpV) — have been closing ranks to stop this bill going through the Lower House.
In an interview with Radio La Red this morning, Massa outlined his reasons for supporting and modifying the bill:
“We are proposing changes be made to the law because we believe that this exit [from default] should be done in the best way possible and because we have to avoid future headaches in order to not repeat the same mistakes of the past.”
The bill in question is “the Public Debt Normalization and Access to Public Credit Law.” The government presented the bill last week: among other things, the bill includes ditching two laws needed to move forward with the vulture fund deals.
These laws are a) the Lock Law, which prohibits Argentina from offering a better deal to the holdouts than the one they presented in 2005 and 2010 (the restructured debt) and b) the Sovereign Payment Law, which requires payments to be made locally and not through the US. For more on these laws, check out this article by The Bubble.
While the government wants to get this out as quickly as possible, the opposition, headed by the FpV, is not keen on letting the bill go through. Given that Cambiemos does not have a majority in Congress, Massa’s support is key for the government to form enough alliances to get the bill approved in the Lower House.
For Massa, the priority is to get out of the default and access the international markets in order to finance, for example, infrastructure projects in the country:
“We want this [restriction] to be lifted in order for Argentina to access the markets [and finance national projects]. Otherwise, we make the same mistake that the country already made before where we borrowed money to pay our salaries. That’s like borrowing money to go out to dinner every day and realize at some point that what you have [in your wallet] isn’t enough.”
As aforementioned, however, this is not the view of all Peronists in Congress. The head of the FpV caucus in the Lower House, Héctor Recalde, made his position clear last week:
“We will not allow quorum when it’s time to discuss the agreement with the vulture funds.”
In order for the Chamber to be able to hold a session, 129 deputies must be present: Recalde’s comment implies that the FpV caucus will not allow for there to be a session when the holdouts agreement comes up. We will have to see how it plays out this week.