Argentina strapped for US dollars pays part of its $44 billion IMF loan with Chinese yuan as country plans to join BRICS bank
Argentina made its latest payment on its $44 billion-loan to the International Monetary Fund using its stock of Special Drawing Rights (SDRs) and Chinese yuan, according to the Economy Ministry. The SDRs are an asset within the IMF created to supplement countries’ official reserves.
According to government spokeswoman Gabriela Cerruti, the payment was made without tapping into the Central Bank’s US dollar reserves.
“This way, we comply with what we agreed upon with the Fund and, at the same time, we don’t use [international] reserves, nor we put the Central Bank’s reserves at risk,” Cerruti said at a press conference.
According to Bloomberg, for the $2.7 billion payment, the country used $1 billion in yuan from a currency swap line with China and $1.7 billion of SDRs.
“The Argentine authorities continue to remain current on their financial obligations to the Fund,” IMF spokeswoman Julie Kozack said in a statement on Friday.
Argentina’s dollar position has been precarious for some time as domestic economic problems have drained the country’s dollar reserves, which are reportedly at their lowest level since 2016.
In early June, Dilma Rousseff, a former president of Brazil and the head of the BRICS New Development Bank (NDB) told Argentinian Economy Minister Sergio Massa that the NBD’s board of directors had formally enabled her to vote on Argentina’s entry to the financial organisation, the outlet said.
“Sergio, I have good news, I found the shortcut. The board of directors has agreed to add Argentina to the bank. It will be announced at the August meeting in South Africa,” Rousseff reportedly told Massa at the bank’s headquarters in Shanghai, adding that “it is the fastest way to go straight to August.”
The lender was established by BRICS member states – Brazil, Russia, India, China, and South Africa – back in 2014. The five economies of the bloc account for more than 40% of the world’s population and nearly a quarter of global GDP.
The proposal on Argentina’s admission, backed by Brazil, will be discussed at the next meeting of NDB governors scheduled for the first week of August in South Africa.