UPDATE 1-Argentina says wants debt deal as fiscal deficit balloons

miércoles 13 de enero de 2016 19:21 GYT

(Adds context on debt talks, new quotes)

BUENOS AIRES Jan 13 (Reuters) - Argentina's new finance minister said on Wednesday it was imperative to resolve the country's legal dispute with U.S. creditors over unpaid debt because financing of the country's fiscal deficit this year may depend on progress on the issue.

Solving the more than decade-long debt battle would enable Argentina to return to global credit markets and stop financing the deficit with the printing presses, a tactic which helped fuel double digit inflation under the previous government.

Finance Minister Alfonso Prat-Gay said the negotiations would be tough but it was in the country's interests to reach a deal. The previous government's failure to do so had cost the economy, he said, with creditor claims in New York having risen to $9.9 billion from $2.943 billion originally.

"We're not going to ignore the issue. It's not our mess but we have no problem in cleaning it up," Prat-Gay told a news conference.

Former President Cristina Fernandez had refused to settle with the funds that bought Argentine bonds on the cheap after its massive 2002 default and then held out for better terms when Argentina restructured its debt.

They are broadly known in Argentina as "vultures" for picking on the carcass of the economy after the default plunged millions of Argentines into poverty.

Finance Secretary Luis Caputo met with for the first time with the funds on Wednesday in the New York office of the U.S. court-appointed mediator Daniel Pollack for preliminary talks.

In addition to the debt battle, Argentina's new center-right government, which took office in December, also inherited a primary fiscal deficit of 5.8 percent of GDP in 2015, Prat-Gay said.   Continuación...