Argentina receives US$4.334 billion in IMF Special Drawing Rights

RIO DE JANEIRO, BRAZIL – Argentina confirmed that it had received US$4.334 billion in Special Drawing Rights (SDR) that the International Monetary Fund (IMF) began distributing among its members on Monday.

According to the Argentine Ministry of Economy, the country received 3,055 million SDRs, equivalent to US$4.334 billion.

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Last March, the IMF resolved to make a general allocation of SDRs, in an amount equivalent to US$650 billion, to reinforce global liquidity affected by the Covid-19 pandemic.

The SDRs will strengthen the reserve assets of the Fund’s 190 member countries.

According to the Ministry of Economy, in the case of Argentina, whose quota in the IMF is 0.67%, the allocation of SDRs “is equivalent today to US$4.334 billion which were deposited as reserves” of the Argentine Central Bank and “will allow strengthening the country’s exchange position”.

The Argentine Central Bank’s reserves closed last Friday at US$42.048 billion.

With reinforced monetary reserves thanks to the SDRs, Argentina is better positioned to face the debt commitments it must settle with the IMF itself during the remainder of this year. At the same time, it continues to negotiate a refinancing agreement with the organization.

In September and December, Argentina must make two principal payments to the IMF, of US$1.88 billion each, to which will be added another interest payment to the Fund for US$389 million in November.

NEGOTIATIONS WITH THE IMF

Meanwhile, the country has been keeping negotiations open since last year with the organization to refinance debts for US$45.52 billion contracted in a financial aid pact signed in 2018, during the government of Mauricio Macri (2015-2019).

Argentina, which is dragging through three years of severe recession and strong macroeconomic imbalances, alleges that it needs to close a new agreement with the agency. It is not in condition to face the heavy payment commitments included in the 2018 pact.

According to that agreement, Argentina should pay the agency, between capital and interest, US$19.02 billion next year, US$19.27 billion in 2023, and US$4.856 billion in 2024.

“The discussion with the Fund is not easy. (…) Many of those who took that debt tell me that we have to settle with the Fund. I am going to settle with the Fund by discussing, preserving the rights of the Argentines and knowing that, before paying the Fund, I have to pay a lot of social debt in Argentina”, said this Monday the Argentine President, Alberto Fernández.

The Argentine government intends to reach an extended facilities agreement with the IMF, with lower interest rates and payment terms spread out over of at least 10 years.