Holdouts: Senate to hear expert opinions Support from opposition likely as provinces think agreement opens door to federal aid

Monday, March 21, 2016

Holdouts: Senate to hear expert opinions

Support from opposition likely as provinces think agreement opens door to federal aid

The Senate is rushing its last committee meetings before the likely approval of the so-called “vulture” bills that would seal an agreement between the country and the holdout bondholders suing Argentina in New York courts.

Economists and legal experts will speak today following Finance Minister Alfonso Prat-Gay and governors last week, as the bill is expected to secure committee approval on Tuesday.

Former Central Bank chiefs like Mercedes Marcó del Pont, Mario Blejer, Javier González Fraga, Martín Redrado and Juan Carlos Fábrega will be among today’s most well-known speakers, with the latter four expected to broadly back the agreement.

A majority of supporters can also be found among Senators. According to opposition Victory Front (FpV) caucus leader Miguel Pichetto, “the debate begins on the basis that a deal is needed. Some want to negotiate a better deal, and really all of us would want that, but the agreement is what it is and what is possible.”

Pichetto predicted that is was likely that governors would support the bill following their visit to Congress on Friday. Governors’ support is key as they have a close relationship with Senators, where smaller provinces hold a higher proportion of seats than in the Lower House.

Pichetto, who represents Río Negro, was the protagonist of one of the longest exchanges with government representatives during last week’s committee meetings, demanding certainty from Prat-Gay and Solicitor General Carlos Balbín that the country would face no further legal challenges after reaching a settlement.

Prat-Gay argued that more than 90 percent of the holdout claims against the country has been settled, pending Congress approval.

The bill, which stipulates that prior anti-holdout laws should be repealed and authorizes the government to issue new debt in order to pay the plaintiffs in New York, was already approved in the Lower House.

Cash for the provinces

The likely agreement in the Senate illustrates the political coalition that President Mauricio Macri is building to move forward with his initial economic reforms.

Provinces in financial trouble are demanding help from the national government, with the latter arguing that it first needs to solve the holdouts conflict in order to be able to raise debt again and finance federal and provincial public spending.

Interior Minister Rogelio Frigerio has been instrumental in negotiations, meeting with provincial representatives and promising help as soon as the nation’s finances get some relief from foreign loans.

The financial hardships faced by the provinces were illustrated yesterday by La Pampa government’s announcement that it is studying whether the salaries of its officers will be paid in instalments.

According to La Pampa’s Finance Minister Ernesto Franco, there is no precedent for such a move in the province since the return of democracy in 1983.

“This is the consequence of the large sums that the federal administration owes to the province. They owe us the 15 percent of the revenue-sharing scheme which was cancelled and payments from the social security system,” he argued, adding that the “slowdown of the economy is also hitting tax revenue” in the province.

Tomorrow’s speakers

Lawyers Alberto García Lema and Beinusz Smukler, former Solicitor General Osvaldo Guglielmino, historians Roberto Cortes Conde and Mario Rapoport, economists Daniel Heymann and Miguel Kiguel and former Economy ministers José Luis Machinea and Roberto Lavagna will also be among tomorrow’s speakers.

If the bill clears committee on Tuesday following the debate, Let’s Change believes it should be passed into law on March 30.

Herald with Télam, DyN

Herald with online media