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ECONOMY | 01-11-2023 21:12

Argentina pays US$2.6 billion maturity to International Monetary Fund

State news agency confirms Argentina's government made US$2.6-billion payment to settle maturity from record International Monetary Fund debt programme.

President Alberto Fernández’s government has paid a US$2.6 billion maturity to the International Monetary Fund from its US$44 billion debt programme, the Télam state news agency confirmed on Wednesday.

With the scheduled payment, the cash-strapped country's international reserves fell to US$21.8 billion, according to the Central Bank, its lowest level since 2006. Economists believe the true amount to be lower – even negative.

At the end of August, the IMF approved a US$7.5-billion disbursement for the country grappling with a prolonged economic crisis, a severe shortage of foreign currency and shrinking international reserves. Annual inflation is running at 138 percent and poverty levels are around 40 percent.

Argentina tapped a currency swap line from China and the remaining amount of IMF special drawing rights (SDRs) from an August disbursement to make the payment on Tuesday, a source with knowledge of the arrangement told Bloomberg.

It remained unclear how much of the China swap Argentina had spent to make the IMF payment. Argentine officials confirmed earlier this month that China approved them using another US$6.5 billion from the US$18-billion swap line. 

Argentina owes the IMF another US$1.77 billion across principal and interest payments in November and December, according to the IMF’s website.  

The country has also been loaned money by Qatar and received a bridging loan from the Andean Development Corporation to pay off its debt.

The loan with the IMF was originally taken under the government of Mauricio Macri in 2018 as an agreement for US$57 billion dollars. 

After taking office at the end of 2019, President Fernández renounced the pending disbursement tranches and renegotiated it in 2021 as an agreement for US$44 billion – of which the country has now received US$36 billion.

With this latest payment, Argentina complies with maturities and avoids falling into arrears.

The IMF has said it plans to revise the agreement once more to authorise further disbursements after the November 19 presidential run-off election between ruling coalition candidate, Economy Minister Sergio Massa, and libertarian La Libertad Avanza outsider Javier Milei. 

Massa has made IMF payments at the final minute a few times this year by using various loans and currencies, illustrating Argentina’s lack of dollars that are putting pressure on the peso and unsustainable currency controls.


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