Argentina will be headed toward aggressive spending cuts or hyperinflation if Congress fails to support debt deals brokered with creditors holding its defaulted bonds, President Mauricio Macri warned.
In an interview on America TV, Macri said the South American country would remain a financial pariah shunned by global credit markets if it failed to resolve the 14-year battle with creditors.
Macri’s centre-right government, which took office three months ago, recently reached deals with creditors who had balked at the previous government’s settlement terms in the wake of the country’s 2002 default on $100bn in bonds.
Macri needs lawmakers to pass those deals to access billions of dollars in new financing and persuade wary foreign businesses that Argentina is a safe investment destination.
But loyalists of former leader Cristina Fernandez, a Peronist, say he is caving into the greed of Wall Street.
Asked what would be the consequence of a defeat in Congress, Macri said: “austerity or hyperinflation. There is no alternative.”
Macri’s comments came just after his finance minister said he would be “forced to implement tremendous cuts” to plug a fiscal deficit that widened to 5.3% of gross domestic product in 2015 from 2.8% a year earlier.
The lower house in Congress is due today to vote on the bill containing the debt deals, including a $4.65bn cash payment to the lead holdout creditors suing Argentina in a US court.
Macri’s ‘Let’s Change’ alliance is the largest party in Congress’s lower chamber, but it needs to secure pacts with opposition lawmakers to push the bill through.
Macri allies have been lobbying moderate Peronist legislators who opposed Fernandez’s hardline refusal to negotiate a settlement.
Yet in a sign Macri’s camp has more last-minute work to do, state-run news agency Telam reported Macri officials will be meeting again with lawmakers aligned with defeated presidential candidate Sergio Massa and a group of Peronist parliamentarians who split with Fernandez in February.
Treasury officials will be seeking to allay any concerns over the decision by a US appeals court on Friday to put on hold the lifting of the injunctions that restrict Argentina from servicing its restructured debt, Telam said.