Argentina to pay the IMF with yuan and SDRs

The change is to avoid further depletion of the country’s international reserves

The Economy Ministry announced it will make this month’s US$2.7 billion payment to the International Monetary Fund (IMF) tomorrow without resorting to the Central Bank’s US dollar reserves, presidential spokeswoman Gabriela Cerruti confirmed today.

Instead, the government will use Special Drawing Rights (SDR, the IMF’s exchange asset) and freely available yuan from the country’s currency swap with the People’s Republic of China.

“This way, we comply with what we agreed upon with the Fund and, at the same time, we don’t use [international] reserves, nor we put the Central Bank’s reserves at risk,” Cerruti said today in a press conference.

Earlier this month, Argentina and China renewed their currency swap line to bolster the South American country’s reserves, which are currently at a record-low negative US$2.2 billion according to the Ecolatina consulting firm. The new agreement also doubled the government’s free access amount, taking it from US$ 5 billion to US$10 billion.

The Herald reached out to the Economy Ministry, the IMF, and the Central Bank for comment but did not immediately receive a response.

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 for the previous debt with the IMF.

This month’s US$ 2.7 billion payment is the highest the government has to face this year. In July, Argentina has to pay another US$ 2.6 billion.

As per the current schedule, the IMF staff’s upcoming fifth review of the program will evaluate Argentina’s performance until March. If favorable, the review would lead to a 3 billion SDR (US$ 4 billion) disbursement.

The IMF and the Economy Ministry are still renegotiating changes in the program’s goals —such as international reserve accumulation targets—, asking the lender to put forward its disbursements and the possibility of using part of them to intervene in the secondary bond market to suffocate currency runs.

Last week, the Argentine government sent a letter co-signed by six Latin American heads of state to United States President Joe Biden, asking him to support Argentina in its negotiations with the International Monetary Fund (IMF). 

Economy minister and presidential hopeful Sergio Massa hoped to send a team to the IMF’s headquarters in Washington last week to close those negotiations. However, the trip didn’t come to fruition and sources in the ministry are unsure of the new date.

Earlier this week, during an event organized by the Chamber of Construction (Camarco, by its Spanish initials) the minister said that the technical negotiations with the IMF were in their final stage.

“We are finishing settling the semester, or [the last two quarters of the year] with the Fund, I left the team working. In the next few hours the program for the next six months will be made public,” Massa said on Tuesday. 

The government has made no further specific announcements regarding the renegotiated program since.

—Télam / Herald


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