Buenos Aires — International Monetary Fund (IMF) spokesperson Julie Kozack said Thursday that countries can use five currencies to settle their debt obligations with the organization, and that among them is the Chinese yuan (RMB).
Argentina used that currency to pay part of the $2.7 billion payment due to the organization in June. While the country’s economic team continues to negotiate a new agreement with the IMF in view of the non-compliance with the three binding targets of the current program, it is speculated that the government could again make use of the freely available tranche of its currency swap with China to pay the $2.65 billion due this month.
The negotiations, about which Kozack did not provide details regarding neither the content nor the terms, take place in a context in which the net reserves of the Central Bank of Argentina (BCRA) are estimated to be around minus $6 billion.
Kozack did not respond to a Bloomberg Linea question regarding an alleged discrepancy between Argentina and the IMF in relation to the primary fiscal deficit target for this year. For the time being, the current target of 1.9% of GDP is in force.
According to the IMF ’s spokesperson, Argentina’s payment to the IMF in June in Chinese currency was a standard practice, and which can be used by member countries. Kozack also stated that, to date, Argentina continues to comply with its financial commitments to the IMF.
She also maintained that the technical teams of the agency and the Argentine authorities have been working intensively to complete the fifth review of the economic program agreed in 2018, and to help the country face a “complex and challenging” situation.
Kozack noted that the focus of the discussions has been to look for alternatives to strengthen the authorities’ program, recognizing the impact of the drought on the economy. This includes discussions on policies to preserve stability by increasing reserves and improving fiscal sustainability, while protecting the most vulnerable sectors of the population.
The IMF spokesperson did not offer details on the content of the negotiations, as they are still ongoing, and said that more details will be communicated when they are available. She also denied the existence of a letter from the IMF to the Argentine government with conditions for the agreement, as had been speculated in some media.
Finally, to a question about the deadline for reaching an agreement before the IMF board recess at the end of July, Kozack reiterated that the teams are working intensively with the objective of moving forward with the fifth review. However, she did not give a precise date for the conclusion of the negotiations.