Argentinian president Alberto Fernandez on Monday dismissed a counter-offer from three groups of creditors who said they had rejected the country's proposal to restructure $66 billion of debt.
"It is impossible for us to move from the last offer," Fernandez said in a statement on public television.
Argentina's last offer, issued under foreign law, was worth 53.5 cents on the dollar, a significant improvement on its original starting position of 39 cents.
Having originally proposed a three-year grace period, the offer reduced that to one year, with repayments beginning in September 2021.
The creditors had earlier said, "Argentina's offer is short of what the creditor groups can accept," adding that they would not meet the government's August 4 deadline to find an agreement.
However, the creditors expressed confidence that an "agreed solution" could be found that ensures "the future economic sustainability for the Argentine people."
The Exchange Bondholders, Ad Hoc and Argentina Creditor Committee groups claim to represent a third of bondholders under foreign law involved in the restructure talks.
That gives the groups veto power over any restructure deal, experts say.
Argentina Creditor had seemed more disposed to accepting the government's offer, but in joining the other two groups, "they are practically in a position to block the whole deal," economist Sebastian Maril told AFP.
"And if they work together, as one, it's going to be very difficult for Argentina to reach an agreement."
The groups did not divulge any details about their counter-offer, but sources close to the negotiation said it represents 56.6 cents on the dollar with the new bonds beginning to accrue interest from September this year.
The groups said their offer would give Argentina relief to its urgent needs, access to capital markets and the legal framework necessary to attract investors.
The bonds represent roughly a fifth of the country's $324 billion debt, which amounts to around 90 percent of its GDP.
In recession since 2018, the Argentine economy has been further punished by the coronavirus pandemic. The International Monetary Fund estimates it will contract by 9.9 percent this year.
With the backing of the IMF, Fernandez has insisted that any deal with creditors be sustainable so that the country can meet its obligations over the long term.
But Argentina has been in default -- for the ninth time in its history -- since May 22 when the country missed a deadline to pay $500 million in interest on the debt that is subject to the current negotiation.