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ECONOMY | 01-11-2023 12:16

Argentina makes US$2.6-billion IMF payment as reserves drop

Government complies with US$2.6-billion maturity, taking reserves to razor-thin levels.

Argentina has paid the International Monetary Fund US$2.6 billion due Tuesday, complying with major maturities before the presidential run-off election November 19, according to two people with direct knowledge of the matter. 

The government, led by ruling coalition presidential candidate and Economy Minister Sergio Massa, paid the IMF as the Central Bank reported reserves fell Tuesday to US$21.9 billion, the lowest level since 2006. With the payment, Argentina avoids falling into arrears — a worst case scenario — on its US$43- billion IMF programme, the lender’s largest.  

With razor-thin level of liquid cash reserves, 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 Tuesday, according to one of the people.

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.  

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.

The government’s dollar shortage spearheaded another controversy in recent days as long lines of cars lined up around gas stations short on petrol in part because the government hadn’t paid tankers anchored off the Argentine coast waiting with fuel. 

Massa faces off against outsider candidate Javier Milei in the definitive November run-off vote where the future of Argentina’s IMF deal is on the line after Massa has failed to meet the key targets this year. 

by Patrick Gillespie & Manuela Tobias, Bloomberg

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