MercoPress. South Atlantic News Agency

Argentina makes payment to IMF and strives to stay afloat

Argentina still faces two more maturities this year but the government first needs to survive the Nov. 14 mid-term elections

While Argentine President Alberto Fernández described his country's situation facing the International Monetary Fund (IMF) as “decide” before the United Nations, a US 1,885 million dollar capital payment was made Wednesday to the global organization.

Thus, Argentina paid the first maturity of the US 44,000 million dollars borrowed by former President Mauricio Macri in 2018.

After the disbursement, Argentina's reserves were believed to be at around US $ 43,178 million, the consolidated balance will not be known with certainty before Friday, financial analysts in Buenos Aires have said.

Argentina still needs to pay by December 2021 almost US $ 400 million in interests as well as another instalment in the same amount of Wednesday's.

At any rate, local financial stability is somehow in doubt following last weekend's emergency decree (DNU) whereby Government bonds were transferred to the Central Bank in exchange for the US $ 4,334 million received from the IMF on August 23 for Special Drawing Rights (SDR).

The agreement with the IMF is planned for the execution of the 2022 Budget, according to the bill sent to Congress last week by the Economy Ministry, which foresees no increase in spending, while funding sources are already planned, so there is no need to use those SDR funds to finance the 2021 spending, according to the Argentine government.

The new DNU laid out an indirect mechanism to apply the new resources to the payment of IMF debt while at the same time allow for the financing of domestic expenses, while negotiations continue.

These dealings need to be finalized by March 2022, as per the agreement already signed with the Paris Club, and which require a previous accord with the IMF.

Argentina's US $1,885 million payment was tantamount to 1,327 million SDR, the IMF currency, analysts have explained.

Argentina has received the equivalent to US $ 4,334 million in Special Drawing Rights last month.

“Today the payment of the maturity was completed with the IMF, which will be reflected in the international reserves together with the variations that reflect the prices of the different instruments that make up the reserves,” an Argentine Central Bank sourced quoted by the Buenos Aires daily Ámbito explained.

For the remainder of 2021, Argentina has to pay the IMF almost US $ 400 million in interests by November and another US $ 1,880 million on December 22, provided a new scheme is not agreed upon at an earlier date.

The Nov. 14 mid-term elections will be crucial in determining the negotiating power of an administration many believe to be running on political fumes.