By Juan Décima and Facundo Iglesia

Argentina will make an interest payment to the International Monetary Fund (IMF) due this Friday with funds provided by Qatar in Special Drawing Rights (SDR), an international reserve asset created by the IMF. The Arab country will loan Argentina 580 million SDR, equivalent to US$755 million.

In a press release, the Economy Ministry said that Argentina will pay Qatar back once the IMF Board approves a US$7.5 bn disbursement in the second half of August. The country and the IMF Staff reached an agreement for the fifth and the sixth reviews of the current program last Friday, July 28. 

According to official sources, Qatar will not charge any fees for the use of the SDRs. Argentina is not required to provide a warranty for the funds and will have to pay the standard 4.033% interest rate applicable to SDRs. This is the first credit operation between Argentina and Qatar.

In the decree that makes the financial operation official published this Friday in the Official Bulletin, the Economy Ministry confirmed the deal with Qatar was struck due to the fact that the minimum time required to implement the measures agreed upon with the IMF exceeded the maturity deadline, and thus required the country to explore other avenues to make payments. 

These funds extended by Qatar, together with the US$1 billion loan granted by the Development Bank of Latin America (CAF, its Spanish acronym) and the US$1.7 billion in yuanes it received via the extension of its currency swap with China, have allowed Argentina to meet its maturity deadline with the IMF without using its own reserves, something Economy Minister Sergio Massa had stressed when announcing how the country would meet its obligations. 

You may also be interested: Argentina to pay IMF with China swap extension, CAF loan

Argentina had already paid the IMF US$2.7 billion on Monday after postponing all three of its July payments to the last day 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 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.

The announced US$7.5 billion disbursement comes from the combination of the fifth and sixth reviews of the program. The next review is expected to take place in November, after the presidential elections.

You may also be interested: Argentina and the IMF reach staff-level agreement

“The gold is in its place”

A rumor making the rounds Thursday that the government had used part of its gold positions to pay the IMF was denied by Central Bank sources contacted by the Herald. The story sprang due to a report from a consulting firm that said that the monetary authority’s gold position had shrunk 11% in the last week of July, wondering if the gold had been used to pay the IMF — even if the government had announced earlier this week that it had done so by extending its currency swap with China and using a loan from the Development Bank of Latin America.

“The Central Bank’s balance sheet reflects regular financial transactions to enhance the reserves’ profitability,” Central Bank head Miguel Pesce told the Herald. “These operations include all assets held by the BCRA and are audited internally and externally. In the case of gold, the BCRA maintains the same position.”

“None of these regular operations were associated with the payment of this week’s maturity with the IMF. Payments were made as reported,” Pesce added.

“The gold is in its place,” another source in the Central Bank said.