Argentina on Monday made an initial payment of $642 million to the wealthy nations of the Paris Club, as per the debt refinancing agreement with that entity signed last May, authorities said.

"On this date, the Economy and Public Finances Ministry ... made the payment of ... $642 million corresponding to the initial payment of principle owed to the creditor nations comprising the Paris Club," said the ministry in a communique.

The statement added that "in this way, Argentina is continuing its path of resolving the international liabilities produced by the 2001 default."

The agreement signed May 29 establishes the mechanisms whereby over the next five years Argentina will pay off its $9.7 billion debt, including both principle and interest, with the international forum of 19 creditor nations, the payment of which was suspended by the economic and social crisis of 2001.

Buenos Aires has been practically excluded from the international capital markets since its $100 billion default in 2001-2002.

The accord establishes that, after Monday's payment, the second tranche of $500 million will be paid in May 2015 and a third payment will come in May 2016.

Meanwhile, Argentina is immersed in negotiations with international hedge funds, who have been demanding that Buenos Aires pay its roughly $1.5 billion debt to bondholders, including both principle and interest.

The hedge funds want full payment to be made in cash, but Argentina says that it cannot eliminate the debt in this way because it would violate a legal clause stipulating that certain creditors may not be given better payment terms than creditors who accepted steep haircuts in 2005 and 2010 debt restructurings.

Buenos Aires faces the prospect of default on July 30, when the 30-day grace period for making that payment expires, if it cannot resolve the dispute with the litigating hedge funds before then.

Argentina defaulted on roughly $100 billion in debt in December 2001 - the largest sovereign default in world history - amid a financial meltdown and economic depression. EFE