Argentine default resolution may be drawing near

Subject

Prospects for a successful debt deal.

Significance

Nearly 15 years after the 2001 default, the Argentine government has made a proposal to repay holdout creditors who did not take part in the 2005 and 2010 debt restructurings. If successful, this would allow Argentina to borrow abroad the fresh funds it needs to boost a stagnating economy. Two of the biggest 'vulture funds' and Italian bondholders have taken up the offer, but the most intransigent funds, such as Elliot and Aurelius, have yet to accept.

Impacts

• The deal is needed to regain access to foreign investment and overcome the economic stagnation of the last four years.
• A successful deal would strengthen the Macri administration, which is paying the political cost of economic adjustment.
• Success is especially crucial to macroeconomic stability given the unfavourable global context, notably the severe recession in Brazil.