Argentina's deal to pay debts can lead to more financial backing from U.S. Congress

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After years of stubborn negotiations with U.S. bond holders, Argentina has finally expressed its commitment to pay off its debt, paving the way for its re-entry into the international finance market. This new strategy has prompted the U.S. Congress to propose a bill providing a $4.6 billion package, which should aid the Latin American country from lifting the economic depression that has bogged it down for decades.

According to Nouse, Argentina's newly elected President Mauricio Macri brokered this deal, an action that would have been avoided and rejected by his predecessors. Macri won the election last November largely on his promises of economic restoration, founded on a platform of free-market mechanisms. Argentina's former deadlock with the bond holders and its alienation from the international market, had stemmed from its payment default amounting to billions of dollars in 2001.

Reuters elaborates that the $4.65 biillion that Macri is asking from Congress will in fact go to the bond holders, which is the first of many steps that Argentina will take to restore its good standing with international creditors. The U.S. Congress will discuss the proposal next week. Approval willl take it to the next stage which is a Senate deliberation.

In its analysis, the Global Atlanta says that this breakthrough can bring about the support of other international organizations, like the International Monetary Fund, the World Bank, and the Inter-American Development Bank. Adding financing can restart the moribund economy and build infrastructure, which in turn can lure in more investors.

Laurence Wiener, partner at Wiener Soto Caparros, says, "This government needs money badly. They need to shore up their reserves, so they need to tap the debt markets, and Argentina is attractive: Other than what they're arranging, it virtually has no debt."

Global Atlanta adds that the atmosphere in Argentina has improved, with a people who have found a new optimism that is tempered with a firm understanding of their situation. A more accurate description of the Argentinians today is one of hope, but not necessarily happiness.

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