NEW YORK (AP) ― Argentina’s negotiations with creditors to resolve a dispute over $1.5 billion in unpaid debts remained deadlocked following talks Friday, setting it on a course for a possible catastrophic default this week.

Argentina will default for the second time in 13 years if it cannot reach a deal with the U.S. hedge funds before July 30. Daniel Pollack, the court-appointed mediator in the dispute, met with Argentine officials and in a statement released after the talks said that progress had not been reached. Pollack also said the Argentines were returning to Buenos Aires Friday night, but he expects more talks before the deadline.

Following a U.S. judge’s order, Argentina can’t pay investors who accepted lower-valued bonds after its record $100 billion default in 2001 unless it also pays off creditors who didn’t participate in previous bond swaps.

President Cristina Fernandez has long refused to negotiate with the plaintiffs led by New York billionaire Paul Singer’s NML Capital Ltd., who spent more than a decade litigating for payment in full rather than agreeing to provide Argentina with debt relief. But Fernandez has been backed into a corner by NML Capital’s payment plan and has been sending a delegation to meet the negotiator in New York in hopes of averting a default.

“Argentina is being attacked by speculative interests in a totally undeserved way,” Fernandez said in a speech Friday night.

“The ones involved in this suit never loaned a single cent to the Republic of Argentina but instead bought defaulted bonds in 2008 ― in other words they bought worthless bonds on the cheap,” she said.

The holdout creditors accuse Fernandez’s government of refusing to negotiate to provoke a default.

“Argentina’s government made clear that it will be choosing to default this week. Creditors arrived at the (debt mediator’s) office this afternoon prepared to negotiate and willing to be flexible in forging a solution,” Stephen Spruiell, an NML spokesman, said in a statement Thursday. “Argentina again refused to negotiate any aspect of the dispute.”

Paying the hedge funds that Fernandez often calls “vultures” in full would likely trigger lawsuits from other bondholders demanding to be paid on similar terms. Argentina’s government estimates that the liability could run up to $15 billion.

With nearly $29 billion in foreign reserves, Argentina appears to have the money to pay its bills. But those reserves include loans to other countries, deposits with the IMF and other assets that aren’t easily used. Take those away, and Argentina has roughly $16 billion on hand.

Troubled countries often find bond investors willing to lend to them to pay other creditors. But Argentina has been locked out of the bond markets for more than a decade. Some investors would probably step up to lend it money, but at high interest rates ― and at high political cost for the leftist government.

Fernandez and her husband, the late President Nestor Kirchner, used much of the Central Bank’s reserves to pay down Argentina’s debts, provide energy subsidies and fund social programs, weakening its ability to control one of the world’s highest inflation rates and manage the money supply.

“It is crunch time in Argentina where the authorities seem to be running out of grace, and literally also of the ‘grace period’ to make the missed coupon payment by July 30 in order to avoid another default,” said Alberto Ramos, Latin America analyst at Goldman Sachs.

“One can only infer from the innumerous press releases by the parties involved that the court-assisted negotiations (or the lack thereof) do not seem to have generated any tangible progress,” Ramos said. “Hence, a midnight-hour settlement agreement with the holdouts seems increasingly less probable.”