Argentina delays U$S 2.7 billion IMF payment

The IMF board is expected to approve a U$S 5.3 billion disbursement next week

According to sources from the Economy Ministry, Argentina will not meet a U$S 2.7 billion deadline with the International Monetary Fund (IMF) this week, opting to wait for an expected U$S 5.3 billion disbursement from the same financial institution at the end of the month.

The government and the IMF signed an Extended Fund Facility agreement in 2022 after renegotiating the US$44 billion debt former President Mauricio Macri had acquired in 2018. The deal includes an economic program that Argentina must comply with in order to receive disbursements every three months, which are used to pay for the previous debt with the IMF.

In its recent fourth review of the economic program, IMF staff formally requested a U$S 5.3 billion disbursement to the IMF board, among other things. The IMF board ultimately decides whether or not to approve IMF staff’s recommendations and is expected to meet at the end of March.

Argentina was expected to pay between March 21 and 22, but will now await the approved disbursement in order to deliver U$S 2.7 billion back to the IMF.

The IMF staff also recommended relaxing Argentina’s reserve accumulation targets, considering the drought and the costs of the Ukraine war. Others, like the fiscal deficit goal of 1.9% GDP, were maintained. 

Central Bank and other payments

The Argentine Central Bank announced two other disbursements today totaling US$ 680.4 million. One is from the Andean Development Corporation (CAF) and another from the Central American Bank for Economic Integration (CABEI). 

Official sources also said that there is an expected fourth payment from Argentina’s currency swap program with China worth US$ 1 billion by the end of the month. 

“They give the Central Bank liquidity and are part of the US$ 18.5 billion swap, of which US$ 5 billion were going to be freely available,” said ministry sources. “It doesn’t alter the number of foreign exchange reserves, it gives liquidity in order to intervene in the currency market.” 

The currency swap with China — an agreement between the two countries’ central banks to borrow each other’s currencies — was formally extended in January this year. There have already been three US$1-billion payments under the new US$ 5 billion agreement and the Central Bank is expecting the fourth to be of a similar sum. 

Bolstering foreign exchange reserves is one of the goals established in the Extended Fund Facility agreement with the IMF.

— with information from Télam


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