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ECONOMY | 01-07-2023 08:36

Short on dollars, Argentina makes IMF loan repayment partly with yuan

Short on dollars, President Alberto Fernández's government has made a US$2.7-billion loan repayment to the International Monetary Fund partly using Chinese yuan.

Short on dollars, Argentina's government has made a US$2.7-billion loan repayment to the International Monetary Fund partly using Chinese yuan.

To avoid dipping further into its limited foreign currency reserves, Argentina’s Economy Ministry said the country had also used so-called Special Drawing Rights or SDRs – an asset created by the IMF to supplement countries' official reserves – for part of the payment due.

IMF spokeswoman Julie Kozack in a statement confirmed: "The Argentine authorities continue to remain current on their financial obligations to the Fund."

Presidential spokeswoman Gabriela Cerruti told reporters Thursday the payment would be made "partly with Special Drawing Rights from the Treasury and partly with yuan, without using Central Bank reserves." 

Argentina reached a deal with the IMF last year to restructure a loan of US$44 billion – the legacy of a record loan contracted in 2018 under former president Mauricio Macri.

President Alberto Fernández’s government is attempting to grapple with the largest IMF assistance programme as it grapples with year-on-year inflation running at 114 percent, a severe shortage of foreign exchange and a poverty level of about 40 percent. A record drought has seen agriculture exports plummet, slashing billions off gross domestic product.

Back in April, Economy Minister Sergio Massa said Argentina would use yuan to pay for Chinese imports instead of US dollars in order to preserve its reserves after securing an extension of a currency swap agreement with Beijing.

“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 programme,” said Kozack on Friday.

The IMF official said technical discussions continue with Argentina "on a policy package to safeguard economic stability in the context of a challenging situation, partly affected by the historic drought. 

"Discussions are focused on strengthening macroeconomic policies to support reserve accumulation and improve fiscal sustainability, while protecting the most vulnerable."

The refinancing deal struck last year requires of Argentina to boost its international reserves and reduce the fiscal deficit.

 

– TIMES/AFP

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