NEW YORK/BUENOS AIRES (Reuters) -The International Monetary Fund said on Friday that Argentina is current in its payment obligations, after the government said it made a $2.7 billion payment to the fund using its existing stock of the IMF’s reserve assets, and Chinese currency.
A spokesperson for Argentina’s economy ministry said the June payments were made “without using dollars” but instead with the country’s holdings of the fund’s special-drawing rights (SDRs) and Chinese yuan.
The operation is expected to have depleted Argentina’s $1.65 billion in SDRs, according to a central bank source, “with yuan making up the difference.”
The use of yuan underscores how desperate the country’s dollar position has become. The central bank source said it was “yet another demonstration of the central bank’s liquidity in various currencies.”
As a result of the payment, Argentina’s foreign currency reserves saw a sharp decrease to around $27.933 billion for end-June, the same source told Reuters, bringing foreign reserves to their lowest since March 2016.
Still, the move gave a boost to Argentina’s markets on the last day of the month, which overall in June saw the stock index tick up nearly 25% and bonds up almost 13%.
The IMF did not respond to requests for comment on the payment method. Reuters reported Thursday the amount and sources of the payment, citing people with direct knowledge.
Both parties are now locked in talks to speed up disbursements from their $44 billion program and ease economic targets, as a major drought continues to hammer vital grains exports.
Argentina’s economy ministry said a team will travel to Washington early next week to continue negotiations.
“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 program,” the fund said separately on Friday, after a “standard informal Executive Board briefing on Argentina” was held Thursday.
Source: Economy - investing.com
