Recession-hit Argentina said on Tuesday it was postponing the payment of a bond after failed attempts to exchange it for other securities.

The decision, announced by the economy ministry, comes a day before a delegation from the International Monetary Fund was due to arrive in Buenos Aires to discuss the restructuring of the South American country's crippling debt to the global financial institution.

Argentina's external debt is $311 billion, according to the latest figures, of which it owes $44 billion to the IMF.

The bond, worth 95 billion pesos ($1.55 billion), was issued 18 months ago under the government of market-friendly center-right then-president Mauricio Macri.

But the country is now run by center-left Peronist President Alberto Fernandez.

Economy Minister Martin Guzman says Argentina will not be able to pay its debts unless its economy starts to grow
Economy Minister Martin Guzman says Argentina will not be able to pay its debts unless its economy starts to grow Argentina's Economy Ministry / HO

The bond's payment due on Thursday was meant to be linked to the evolution of the exchange rate, something which made it highly attractive.

The peso has depreciated by 55 percent since the issue making it harder for the government to repay the debt.

The economy ministry said it was issued "in the context of a profound economic, exchange and debt crisis."

"We all know what happened next: the macroeconomic breakdown worsened, the Argentine peso depreciated significantly, and consequently the debt burden imposed by this bond rose to even more unsustainable levels."

The ministry said the country would honor the payment of interest, even though it was deferring the debt.

The ministry added that individuals with bonds worth the equivalent of less than $20,000 would be paid.

Argentina