Cabinet Chief Jorge Capitanich said Argentina was considering opening proceedings at international tribunals in The Hague after it was declared to be in technical default.
The announcement came just hours after last-minute talks in New York with a group of bond-holders failed.
The bond-holders are demanding a full pay-out of $1.3 billion.
Argentina says the bond-holders are “vultures” using the South American country’s debt problems to make a big profit.
The investors are US hedge funds that bought debt cheaply after Argentina’s economic crisis in 2001-2002.
They are also known as “hold-outs” because they did not sign up to a restructuring of debt which the majority of bond-holders agreed to in 2005 and 2010.
Under that deal, investors agreed to settle for about one-third of what they were originally owed.
However, hedge funds NML and Aurelius Capital Management bought up a large chunk of the remaining distressed debt at low prices.
They demand to be paid the full face value of their holding.
Jorge Capitanich said Argentina would denounce the “vulture funds” before the International Court of Justice at The Hague and the UN General Assembly.
He said the US was to blame for its “shameful” handling of the funds’ case against Argentina.
“The responsibility lies with a state, that of the United States of America,” he said in a news conference at the presidential palace.
Jorge Capitanich accused the US of “not acting in an adequate manner”.
The Argentine government had expected the dispute to go all the way to the US Supreme Court, which would have bought the country more time.
In June, the Supreme Court declined to hear Argentina’s appeal against the decision of a lower court that made it liable for the money.
Under that court’s ruling, Argentina cannot use the US financial system to keep paying the restructured bondholders unless it also pays the “vulture funds”, placing it in technical default.
However, Jorge Capitanich denied the country was in default at all, arguing that it has the money to pay the interest that became due to the restructured bondholders on June 30 but that it was barred from doing so by the court’s ruling.
He suggested that holders of its performing debt demand their money from the US judge who blocked the June 30 interest payment.
Jorge Capitanich also suggested one way out of the impasse would be for a third party to buy out the hold-out investors.
He said that move would allow them to side-step a clause that was seen as a major stumbling block on the way to a deal.
The clause, known as RUFO (rights on future offers) states that Argentina cannot favor the hold-outs over those who accepted the restructuring deals.
Jorge Capitanich also said that in the meantime Argentina would maintain its policies to stimulate the economy.
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