Latin America & Caribbean

Argentina rejects US ruling over foreign debt repayment

Economy Minister Hernan Lorenzino at a press conference on 22 November 2012
Economy Minister Hernan Lorenzino says Argentina will fight the US ruling

Argentina will appeal against a US ruling ordering it to pay $1.3bn (£800m) to foreign creditors holding bonds that it defaulted on in 2001.

The government has until 15 December to reimburse the hedge funds, which shunned two exchanges of defaulted debt in 2005 and 2010.

But Economy Minister Hernan Lorenzino rejected the decision, saying it was illegitimate to pay "vulture funds".

Argentina defaulted on $100bn of bonds in 2001, a record amount at the time.

But by 2003 a recovery was under way, and the International Monetary Fund (IMF) agreed to a new loan.

Since then, Argentina has restructured its massive debt twice, offering creditors new bonds for the defaulted ones.

'Must pay'

However, lenders including Elliot Associates and Aurelius Capital chose to hold out and pursue the Argentine government through the courts.

"It is hardly an injustice to have legal rulings which, at long last, mean that Argentina must pay the debts which it owes," US district judge Thomas Griesa said.

"After 10 years of litigation this is a just result. Argentina owes this and owes it now."

But President Cristina Fernandez de Kirchner said her government would not pay a single dollar.

While her administration has reimbursed the money borrowed from the IMF, Mrs Fernandez considers the bond debt illegitimate.

Mr Lorenzino said the government was prepared to take its appeal to the US Supreme Court.

"We'll fight all decisions that are against the interests of our country," Mr Lorenzino said.

Some analysts say the hedge funds' legal victory has raised fears Argentina could be plunged into yet another debt default.

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