Channel NewsAsia

Argentina hopes for last-minute exit as default looms

Argentina voiced hope on Tuesday (July 29) for a last minute solution to stave off a default on its debt in one day's time, but repeated its unwillingness to budge in negotiations with creditors.

BUENOS AIRES: Argentina voiced hope on Tuesday (July 29) for a last minute solution to stave off a default on its debt in one day's time, but repeated its unwillingness to budge in negotiations with creditors.

Buenos Aires has until midnight on Wednesday (July 30) to resolve its dispute with the so-called "holdout" hedge funds, whose refusal to accept a write-down on the debt it defaulted on in 2001 has pushed South America's third-largest economy to the brink of its second default in 13 years.

"We hope the negotiations can advance, but that doesn't depend on us," President Cristina Kirchner's cabinet chief, Jorge Capitanich, told journalists on Tuesday as negotiators prepared for last-ditch talks in New York with the US court-appointed mediator tasked with resolving the stand-off.

Capitanich said Economy Minister Axel Kicillof, who is currently in Venezuela for a summit of South American regional bloc Mercosur, might fly to New York to take part in the talks.

"He will decide that together with the president," Capitanich said.

US District Judge Thomas Griesa has barred Argentina from paying holders of its restructured debt without also paying the holdouts the full US$1.3 billion (S$1.62 billion) it owes them.

That has placed Argentina between a rock and a hard place, since the 92 per cent of creditors who agreed to the restructuring of its debt - taking a haircut of 70 per cent on their bonds - could launch claims for equal treatment.

Argentina was due to make a US$539-million (S$669 million) payment on the restructured bonds on June 30, but Griesa's ruling prevented it from doing so. The 30-day grace period on the payment expires on Wednesday.

Argentina has so far taken a defiant approach to negotiations, insisting the only possible solution is for the judge to suspend his ruling until the end of the year.

Analysts have warned a default would deepen the economic malaise gripping Argentina, exacerbating its already rampant inflation and perhaps forcing another devaluation of the peso, already devalued 20 per cent in January. 

Tweet photos, videos and updates on this story to  @channelnewsasia