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26 Jun, 2014 15:04

Argentina sounds alarm, says close to 'technical default'

Argentina sounds alarm, says close to 'technical default'

Argentina’s economy is on a collision course, and is headed for default following a US Supreme Court ruling that could send creditors demanding bond payments, Economic Minister Axel Kicillof warned UN diplomats.

By June 30, the country needs to pay out creditors for billions of dollars of bonds that were issued before its $95 billion default in 2001.

"Whichever way you look at it this ruling is forcing Argentina towards the risk of economic crisis,” Reuters quotes Kicillof talking at the UN headquarters in New York on Wednesday.

"… this is going to push us into a technical default," he added.

Argentina is asking for more time to negotiate a solution with the creditors that Kicilloff refers to as “vulture funds”. Argentina must pay $1.33 billion to NML Capital, a hedge fund and subsidiary of Elliot Capital Management.

The country only has $28.5 billion in foreign currency reserves, and will not be able to meet the enormous demand. If they don’t pay, the US can revoke its privilege to pay bond holders through Argentina’s bank in the United States, the Bank of New York Mellon. Argentina’s President Cristina Fernandez de Kirchner has called this ‘extortion’.