The lack of dollars in its central bank’s international reserves forced the government of Argentina to make an unprecedented decision this Friday. For the first time, it met a payment obligation with the International Monetary Fund (IMF) in Chinese yuan worth the equivalent of one billion US dollars, with a further $1,7 billion disbursed in Special Drawing Rights, considered the IMF’s currency as it is a reserve asset made up of a basket of the world’s main currencies.
This is the first time that the Alberto Fernández administration resorts to freely available yuan from the currency exchange with China to pay the international organization. This money was intended to finance imports from the Asian country, but officials had already anticipated that it could be put to other uses.
“The payment of the June maturities was made without using dollars but SDRs [special drawing rights] and yuan,” the Economy Ministry, headed by presidential hopeful Sergio Massa, said in a statement. The IMF confirmed the transaction. The international organization accepted this form of payment while negotiations to restructure Argentina’s debt continue.
The Argentine team has asked to reformulate goals agreed with the IMF in 2022 given the impossibility of meeting them due to the impact of the worst drought the country has seen in decades. The countryside is the nation’s main economic engine and losses due to the lack of rain are running into $20 billion by the latest count.
The negotiations are taking place in the middle of an election campaign, with Massa in the double role of Minister of Economy and pre-candidate of the Peronist movement for president. The country will hold primary elections on August 13 and general elections on October 22.
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