| BUENOS AIRES
BUENOS AIRES Aug 14 The hedge funds suing
Argentina over its 2002 debt default are an "international
mafia" out to wreck the country's finances, the government said
on Thursday, pumping up the rhetoric in a battle that is
squeezing the struggling Argentine economy.
With its peso currency at record lows, foreign reserves down
more than 5 percent over the last year and vast shale oil and
gas resources laying undeveloped in its southern Patagonia
region, Argentina is desperate to tap foreign financing.
But the debt case, which stems from Argentina's default on
nearly $100 billion in sovereign bonds 12 years ago, is blocking
its access to the international bond market.
"Today we are in the hands of an international financial
power comprised of small, voracious interests that form a real
international mafia," Jorge Capitanich, the Cabinet chief and
government spokesman, told reporters in Buenos Aires.
Many Argentines side with their government against a group
of hedge funds that rejected the country's 2005 and 2010 debt
restructurings in which holders received less than 30 cents on
Holdout funds led by Elliott Management Corp and Aurelius
Capital Management bought Argentine bonds at a discount before
and after the 2002 default and have pressed their demand for
payment of 100 cents on the dollar in the U.S. courts.
In 2012, a federal judge in New York awarded them $1.33
billion plus interest and barred Argentina from repaying holders
of exchanged debt without paying the holdouts too.
The case pushed the country into default again last month,
effectively slamming the door on Argentina's hopes of tapping
global bond markets.
"The world has to say 'enough' to the vultures," Capitanich
said. "They are trying to harm the Argentine people and violate
Left-leaning President Cristina Fernandez and her ministers
have long disparaged the holdout funds as "vultures" picking at
the bones of Argentina's traumatic 2002 default.
But the country says a clause in the deal to restructure its
debt, set to expire in January, prohibits the government from
offering better terms to the holdouts than were offered in the
2005 and 2010 restructurings.
With no negotiated solution on the horizon, Argentina's peso
weakened more than 1.5 percent on Wednesday to a record low of
13.15 per U.S. dollar in unofficial trading.
Foreign exchange controls force most Argentines to buy
dollars on the black market, which is widely seen as a truer
rate of exchange than the official rate of 8.2750 to the
Local government bonds also fell and reserves stood at
$28.967 billion, down 5.33 percent over the last year.
(Additional reporting by Walter Bianchi; Editing by Paul Simao)