In recent years, soybean farmer Mario Caceres had to pay interest rates of up to 50% on the bank loans he needed to buy planting equipment, supplies and seeds — a cost that stymied his plans to expand the business.

Now, Caceres sees a brighter future. He expects interest rates to decline significantly, allowing him to build new grain silos and buy a fleet of trucks for his 2,500-acre farm in San Miguel del Monte, 100 miles west of Buenos Aires.

“If Argentina keeps doing the right things, interest on bank loans will come down,” Caceres said.

His optimism comes from Argentina’s resolution of a dispute with foreign creditors dating back to its 2002 default on billions of dollars in bond payments.


On Friday, the country paid $9.4 billion to 220 “holdout” bondholders, a settlement expected to allow Argentina to leave the list of global deadbeats and regain access to the cheap credit.

Soon, farmers such as Caceres, shop owners and auto parts makers will all be paying less for loans, which should in turn stimulate investment and expansion.

Macri bought a house in ruins, and before fixing it he has to stop the leaks in the roof. Martin Kanenguiser, economist

At least that’s the argument made by President Mauricio Macri, who made bond settlement a promise of the campaign that won him election in November. His predecessor, Cristina Fernandez de Kirchner, had refused to pay, arguing that the bond owners were “vulture funds” attempting to extort money from the country.


The holdout bondholders refused to accept the terms of settlements reached in 2005 and 2010 that paid the vast majority of creditors at heavily discounted rates. A New York federal judge agreed with the dissidents and ordered Argentina to pay the holdouts the full face value of their bonds.

Macri won the support of the Congress on the issue, then negotiated a $9.4-billion settlement that the creditors and the New York judge approved.

“This will establish the base for more jobs, a return to growth and the road to zero poverty,” Argentina’s finance minister, Alfonso Prat-Gay, said Friday. “Now we start a new stage.”

Macri has said it could take time to see the benefits because the economy is in a deep hole.


“Macri is hoping for an economic reactivation in the second half of this year, that cheaper credit will restart construction and industry through his public works plan,” said Mariano Gorodisch, an independent economist in Buenos Aires. “Housing should also improve, which could have a positive impact on employment and consumption.”

Others said the jury is still out on the Macri plan. “Macri bought a house in ruins, and before fixing it he has to stop the leaks in the roof,” Martin Kanenguiser, another Buenos Aires economist, said Friday.

Since taking office, the president has pushed through several economic reforms, including the elimination of some subsidies that contributed to a 7% deficit in government spending last year.

Macri has also cut of thousands of government employees and reduced subsidies of consumer electricity and transportation.


Macri, a center-right politician and former businessman, also has been trying to attract foreign investment, which largely dried up under Fernandez because of nationalization and price controls.

His efforts appear to be paying off. Last week, Argentina completed its first bond offering in more than a decade, selling $16.5 billion in debt. Macri earmarked $9.4 billion of the proceeds to pay off the holdout bondholders, and the remaining $7.1 billion for construction of roads, ports and other public infrastructure.

Still, the economy remains in trouble, with 12% unemployment, 30% inflation and negative growth predicted this year.

D’Alessandro reported from Buenos Aires and Kraul from Bogota, Colombia. Both are special correspondents.


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