Argentina makes IMF loan repayment partly with yuan

Argentina paid a $2.7 billion loan repayment to the International Monetary Fund on Friday, partly using Chinese yuan, according to the economy ministry.

To avoid depleting its limited foreign currency reserves, the country paid some of the bill with Special Drawing Rights, an asset issued by the IMF to bolster countries’ official reserves.

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

Government spokeswoman Gabriela Cerruti told reporters Thursday the payment would be made “partly with Special Drawing Rights of the Treasury and partly with yuan, without using Central Bank reserves.”

Argentina secured an agreement with the IMF last year to restructure a $44 billion loan, the legacy of a record loan signed in 2018 by former President Mauricio Macri.

Argentina is the target of the IMF’s largest assistance program, as it struggles with year-on-year inflation of more than 100%, a chronic lack of foreign exchange, and a poverty rate of around 40%. Agriculture exports have plummeted due to a record drought.

Following a currency exchange arrangement with Beijing, the South American country declared in April that it will pay for Chinese imports in yuan rather than US dollars in order to protect its reserves.

Technical conversations with Argentina continue, according to Kozack, “on a policy package to safeguard economic stability in the context of a challenging situation, exacerbated in part by the historic drought.”

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

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

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