South America has paid part of its IMF loan with Chinese yuan because it didn’t have enough U.S. dollars.
The Economy Ministry says that Argentina’s latest payment on its $44 billion loan to the International Monetary Fund was made with its stock of Special Drawing Rights (SDRs) and Chinese yuan. The IMF made the SDRs an asset to help countries with their legal reserves.
Gabriela Cerruti, who works for the government, said the payment was made without using the Central Bank’s U.S. dollar funds.
At a press conference, Cerruti said, “This way, we stick to what we agreed to with the Fund, and we don’t use [international] reserves or put the Central Bank’s reserves at risk.”
Bloomberg says the country used $1 billion in yuan from a currency swap line with China and $1.7 billion in SDRs to pay the $2.7 billion bill.
IMF spokeswoman Julie Kozack said in a statement on Friday that the Argentine government is still meeting all of its financial responsibilities to the Fund.
Argentina’s dollar position has been weak for a while because its economic problems have caused its dollar reserves to drop to their lowest level since 2016.
At the same time, the government has been using the yuan more and more as an alternative way to pay. This year, Argentina and China renewed a currency swap deal for 130 billion yuan, about $18 billion. This allowed the Chinese currency to be used freely in Argentina. Last month, Argentina’s central bank also said it would let private banks open customer accounts in yuan. This was done to encourage local businesses to pay overseas in Chinese currency. A statement on the government website said that it also promised to sell more yuan to pay for imports.
In April, Argentina’s Economy Minister Sergio Massa said that most of the country’s monthly goods from China would be paid for in yuan instead of U.S. dollars. China is Argentina’s second-largest trade partner right now, after Brazil. It is also the second largest place where Argentina sends its goods.
