Economy minister Sergio Massa announced Monday morning that Argentina will meet its July dues to the International Monetary Fund (IMF) by extending its currency swap with China and using a loan from the Development Bank of Latin America.

In a broadcast video message, Massa, who is also ruling coalition Unión por la Patria’s main presidential candidate, said China had enabled the second tranche of its currency swap, to allow Argentina to draw on US$1.7 billion in yuanes. The remaining US$1 billion owed in July will come from a loan that the Development Bank of Latin America (CAF, by its Spanish initials) approved Friday night.

Earlier on Friday, the IMF and Argentina reached a staff-level agreement granting the country access to a US$7.5 billion disbursement in the second half of August.

“Argentina won’t use a single dollar from its reserves for the payment due today,” Massa said in the announcement.

The country has to pay the IMF US$2.7 billion after postponing all three of its July payments to the last day of the month. 

“This way, we are protecting reserves in a year in which, in addition to the problem of the inherited IMF debt, we have the worst drought in our history,” Massa said.

The Economy minister said the drought cost the country US$20 billion in exports this year, and over US$5 billion in lost tax income.

“Our challenge is to keep preserving the reserves, maintaining the activity level, and imports of finished and intermediate goods,” he added. Net reserves are calculated to be negative US$7 billion.

Former president Mauricio Macri signed a loan of US$44 billion in 2018, the biggest in the IMF’s history at the time. The debt was renegotiated by Alberto Fernández’s office, and reached an Extended Fund Facility with the lender. This includes an economic program that Argentina must comply with to receive disbursements every three months, which the government uses to pay the previous debt.

“The loan from the IMF is probably the worst inheritance from the previous government. We can’t see [that money invested] in building roads, or schools, hospitals, nor in making things better for Argentine businesses or families,” Massa said.

According to the minister, that loan “ended up being a program that just financed capital flight in 2018, but Argentina must pay it to be a sovereign country again.”