Argentina is on course for a technical default on its government borrowing on Friday as the country continues to hold talks with international investors over plans to restructure its debts. Financial investors said they expected the country to miss $500m (£410m) in interest payments on its borrowing, according to the Reuters news agency, as the government tries to renegotiate its borrowing before a 2 June deadline. With the economy in recession even before the coronavirus outbreak and spiralling inflation, Argentina has about $65bn in debt owned by overseas investors, which both the state and its creditors believe is unsustainable. The government has asked bondholders to accept significantly lower interest payments on its debts and to defer payments until 2024. Investors had thus far rejected the terms proposed by president Alberto Fernández’s centre-left government, which came to power late last year. This month, a group of leading economists including Thomas Piketty and the Nobel prize-winner Joseph Stiglitz urged bondholders to take a constructive approach to restructuring Argentina’s debts. They argued debt relief for the country would be “the only way to combat the pandemic and set the economy on a sustainable path”. A group of international investors – including Ashmore, BlackRock and AllianceBernstein – that hold about $16.7bn of Argentinian bonds said on Friday that they recognised the country was seeking a comprehensive deal, even though failure to pay would trigger a default, Reuters reported. Sarah-Jayne Clifton, director of Jubilee Debt Campaign, said that Argentina was right to demand a deep debt restructuring and to default if lenders did not accept a deal. “Reckless lending at high interest rates helped to create the current crisis, so lenders and speculators should share in the costs,” she said. City economists said missing bond payments on Friday would result in the country’s ninth sovereign debt default. But talks to restructure the debt would still proceed. Much of Argentina’s debt is owned in foreign currency, making the country more vulnerable to external economic shocks. Argentina’s total public debt reached $414bn – about 93% of its GDP – at the end of last year. The country has been in recession for two years after a currency crisis that led it to agree a three-year loan from the International Monetary Fund for $57.1bn, the biggest loan in the Washington-based fund’s history. Public borrowing is, however, expected to rise sharply this year as the coronavirus pandemic triggers the deepest global recession since the 1930s Great Depression. Nick Dearden, director of Global Justice Now, said Argentina was being bullied by “irresponsible financiers intent on rejecting a very reasonable debt restructure” that would allow the country to meet its obligations to its people during the pandemic. “Governments must not put the demands of creditors ahead of public need, especially during a public health emergency,” he added.