(MENAFN- AFP) Argentina's economy minister hailed lawmakers' approval Thursday of a settlement with foreign creditors, saying it will erase all trace of the 2001 default -- the biggest in history at the time.
Conservative President Mauricio Macri's government claimed a political victory after it persuaded opposition senators to back the agreement which it hopes will help ease Argentina's financial woes.
"This is the definitive move that wipes out the 2001 default," said Alfonso Prat-Gay, one of President Mauricio Macri's team of US-trained ministers who took office in December.
Speaking on the radio, the minister estimated that when the agreement comes into force it will reduce by 60 percent the amount of interest Argentina will have to pay on its debts to the so-called "holdout" creditors.
The agreement passed its final legislative hurdle when the Senate approved it early Thursday by a large majority.
The deal settled a 15-year legal battle standoff in which investors sued Argentina for full repayment in the US courts.
Macri said the deal was necessary to bring Argentina back into international capital markets. It has been locked out of them since it defaulted on nearly $100 billion in 2001.
"This is a message for the world that we honor our debts, we want to rejoin the world, honoring our contracts," Prat-Gay said.
The bill approved by the Senate allows the government to issue $12.5 billion of bonds to settle with the two US hedge funds that sued it, as well as other holdouts.
Those two -- Aurelius Capital Management and billionaire speculator Paul Singer's NML Capital -- settled for a total of $4.65 billion.
Macri's leftist predecessor Cristina Kirchner refused to engage with the hedge funds, branding them "vultures." But Macri made it a priority to settle the dispute after he took office in December.
"No one enjoys paying professional speculators, but this had to be done so that the country can start to grow," Prat-Gay said.
Inflation is squeezing ordinary citizens' spending power. The government has forecast the rate will be about 20 percent this year.
Macri's government has raised tariffs for services such as electricity and water. On Thursday the government was expected to announce a 100-percent rise in transport fares.
The government says the economy is stagnating, although the National Statistics and Census Institute estimated on Wednesday that the economy grew by 2.1 percent in 2015.
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