The ruling is another setback for the country, which is fighting against annual inflation close to 300% and a recession that is worsening, even after President Javier Milei's economic shock therapy.

Argentina has lost its bid to overturn a British court order to pay $1.5 billion to compensate investors for losses suffered in securities linked to the country's growth.

The Court of Appeal on Wednesday rejected the appeal regarding payments to hedge funds, including Palladian Partners LP. Investors alleged that the losses were due to a change in the method of calculating the country's Gross Domestic Product (GDP).

The ruling is another setback for the country, which is fighting against annual inflation close to 300% and a recession that is worsening, even after President Javier Milei's economic shock therapy. The South American nation would run the risk of having difficulty paying part of its debt if it is forced to shell out $1.5 billion in the case, its lawyers argued last month.

The root of the case lies in the non-payment of US$95 billion of the country's debt in 2001, in the midst of one of the worst financial crises in its history. The GDP-linked bonds, which are paid when economic expansion reaches a certain threshold, were part of a restructuring program.

The dispute arose after Argentina changed the base year for calculating growth in 2013. The hedge funds, which also include HBK Master Fund LP, Hirsh Group LLC and Virtual Emerald International Ltd., alleged that Argentina made the changes to avoid payment of bonuses.

The changes were necessary to prevent bond yields from being guided by the "obsolete 1993 GDP measure" through 2035, Argentina's lawyers argued.

At the beginning of the year, the Court of Appeal ordered the country to deposit US$334 million in an account before the May hearing.

As ordered by the court, Argentina must also now publish the required GDP data for values for each year starting in 2014, so that payments for those subsequent years can be evaluated.