The International Monetary Fund has dropped plans to formally back Argentina in its legal battle with holdout investors who refused to take losses on debts in the country's $100 billion default in 2001, AP reported.
The fund said it remains concerned the case could set a precedent making it harder for other countries to get debt relief. But it was wary of taking sides in a U.S. court case after the U.S. government said it would not support the IMF move.
Without U.S. support, the IMF could leave itself open to criticism from the U.S. Congress that it is interfering in the American legal system.
The IMF said in a statement that it also does not want to be seen as taking sides in a dispute over financial claims involving its member governments.