Aurelius Capital Management, one of the lead holdout creditors seeking to settle with Argentina over sovereign debt payments from its 2002 default, said yesterday the government faces a new crisis on July 30 unless it engages in real talks.

Outbreaks of looting have spread across Argentina as mobs take advantage of strikes by police demanding pay raises to match inflation.

Argentina’s second largest city has been rocked by waves of looting and robberies after police went on strike for higher pay .

The Argentine government has announced a huge $11bn budget deficit for 2001.