Argentina, agreement with China to pay in yuan with the IMF

  The Argentine Economy Minister, Sergio Massa, ... announced in a message sent through social channels that the payment of the debt installment with the IMF which was due yesterday has been completed in yuan, thanks to the extension of the currency swap with China. “I want to reassure you, Argentina will not use a single dollar of its reserves to pay today's deadline,” Massa said yesterday. The currency swap agreement allows the two countries to use their respective currencies for bilateral trade.

“On Friday, on the basis of an agreement with the Latin American Development Bank (CAF), a disbursement of one billion dollars was approved. Today, the People's Bank of China and the Chinese government agreed to expand the use of the second tranche of the agreement that Argentina has with the Chinese government, allowing us to pay another $1.7 billion,” Massa said. The minister added that in this way the reserves of the Argentine central bank (Bcra) are safeguarded "in a year in which the worst drought in history has been added to the problem represented by the legacy of the debt with the IMF", costing more than 20 billion dollars to Argentine exports.

Argentina announced on Monday that it would pay a $2.7 billion payment to the IMF with yuan from a China swap and a CAF bridge loan, pending approval of a 7.5 billion disbursement. billions of dollars from the organization. Monday's payment will be offset with $1 billion from a bridge loan from the Andean Development Corporation (CAF) and the rest from the second tranche of an existing swap (currency exchange) with China, the minister said. Last June, Argentina renewed a swap agreement with China for 130 billion yuan (about 19 billion dollars), for a duration of three years and with an extension of the freely available amounts up to the equivalent of 10 billion dollars. This agreement, signed in 2009 and renewed by several governments, is used to pay for imports from China. In June it was also used to meet maturities with the IMF, canceled with that currency and with the SDRs (Special Drawing Rights, the reserves that countries hold in the IMF). Argentina's international reserves include, in addition to dollars, a part in gold and also other instruments such as the yuan from the swap with China.

It is the second time the country has used the yuan to pay the IMF. The International Monetary Fund agreed on Friday with the Argentine government the fifth and sixth revisions of the 44 billion dollar deal that the country made in 2018, which will allow the new disbursement, but only in the second half of August, after being submitted to the approval of the board of directors of the international body. The payment deadline with the IMF will be canceled with $1 billion from a bridge loan from the Andean Development Corporation (CAF) and the rest from the second tranche of a swap (currency exchange) in place with China, he said the minister.