Argentina Congress OKs law restructuring debt payments

The Argentinean Congress has adopted a new law enabling Buenos Aires to pay back the country’s debts to US creditors, sidestepping an earlier US court ruling in favor of the bondholders.

On Thursday, the lower house of Argentina’s Congress unanimously voted in favor of the new debt restructuring plan which allows the government to make debt payments inside the country or elsewhere outside the US jurisdiction.

Later in the day, Argentine President Cristina Fernandez formally enacted the law, which had already been approved by the Senate.

The Argentinean leader described the adoption of the legislation as a “historic event,” adding, “Argentina wants to pay, can pay and is going to pay all its debts to all bondholders.”

The new law comes as the Fernandez government faces a September 30 deadline to repay a debt of USD 200 million.

New York District Judge Thomas Griesa has ruled to freeze Argentina’s June debt payment of USD 539 million in a US bank because two American hedge funds are demanding a full repayment of their money.

The two hedge funds, NML Capital and Aurelius Capital Management, have been described by Argentina as “vulture funds” that are seeking profit out of the country’s financial misery.

Buenos Aires accused Washington of violating Argentinean sovereignty after the US judge blocked the country from servicing its restructured debt.

In August, Argentina filed a lawsuit with the International Court of Justice (ICJ) over the debt dispute with the United States. However, the Hague-based court declined to take any action, claiming it is powerless to act “unless and until the United States of America consents to the court’s jurisdiction.”

Argentina’s 2001 economic collapse caused the country to default on more than USD 100 billion in debt. Argentina is still fighting to deal with the crisis.