Argentina has made its June payment to the IMF, paying part of the amount in yuan. The transfer comes as an Economy Ministry delegation prepares to head to Washington to renegotiate the country’s current program with the Fund, a ministry source confirmed.

The government made the payment in yuan, which were freely available from Argentina’s currency swap with China, and Special Drawing Rights (SDR, the IMF’s exchange asset), without using the Central Bank’s scarce U.S. dollar reserves. Presidential spokeswoman Gabriela Cerruti announced the decision yesterday.

“The Argentine authorities continue to remain current on their financial obligations to the Fund,” Julie Kozack, IMF Director of Communications said today in a press statement. “IMF staff and the Argentine authorities will continue to advance their work in the coming days, with the aim of reaching agreement on the fifth review of the Fund-supported program.”

Kozack added that technical discussions on a policy package to protect economic stability in the context of the historic drought are ongoing. “Discussions are focused on strengthening macroeconomic policies to support reserve accumulation and improve fiscal sustainability, while protecting the most vulnerable,” she said.

A team headed by economy ministry chief advisor Leonardo Madcur and Economic Programming Secretary Gabriel Rubinstein will go to Washington at the beginning of next week, according to a ministry source.

The Economy Ministry team was expected to travel to Washington last week to close the talks, but the trip was rescheduled for the first week in July. Minister Sergio Massa has told his inner circle that he won’t “send any hostages”, meaning that he will only send people to the United States if he knows the negotiations are virtually finished.

US dollars, Chinese yuan, IMF SDR

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

The IMF staff’s upcoming fifth review of the program will evaluate Argentina’s performance until March. If the staff finds that Argentina is sticking to the deal, the review would lead to a 3 billion SDR (US$4 billion) disbursement. The team traveling to Washington aims to work on the negotiations regarding the review, which sources in the Ministry called “advanced.”

The IMF and the Economy Ministry are still renegotiating changes in the program’s goals. Issues on the table include changing Argentina’s international reserve accumulation targets, allowing the state to intervene in the secondary bond market to stop runs on the peso, and the possibility of the Fund making this year’s disbursements earlier than scheduled. This month’s US$2.7 billion payment is the largest this year.

Earlier this month, Argentina and China renewed their currency swap line to bolster the South American country’s reserves. The agreement also doubled the government’s free access amount, taking it from US$5 billion to US$10 billion.

The value of the IMF’s special drawing rights is defined by a basket of currencies including the Chinese yuan, the U.S. dollar, the euro, the Japanese yen, and the British pound. It is the first time that Argentina has paid in a currency different from SDR or U.S. dollars.