AKIPRESS.COM - Brazilian Finance Minister Guido Mantega said Thursday that Argentina's technical debt default can be more accurately described as an "impasse."

"I don't think Argentina is in default, because it is paying its debts," Brazil's G1 news website cited the minister as saying.

"It is an exceptional situation, because a United States judge is preventing it from making the payment," Mantega said.

Mantega said he believed negotiations could still continue between Argentina and the so-called vulture funds that triggered the technical default.

He also said that while credit rating agencies were already beginning to downgrade Argentina, the market in general was waiting to see how the situation unfolds and even adjusting to the new reality.

"There will be no major short-term consequences," said Mantega.

But if it is established that Argentina did in fact default on its debt, "then maybe there would be a greater impact" later on, added the minister.

The impact on the Brazilian economy is "nil," he said, adding that "there will be no direct impact."

On Wednesday, Argentina technically missed its deadline to make an initial payment to creditors. Even though it had deposited the funds in a New York bank. A New York judge barred the transaction due to legal wrangling.

Argentina is one of Brazil's main trading partners, and both countries are founding members of the Southern Common Market (Mercosur).