Buenos Aires — As expected, the International Monetary Fund (IMF) approved a $7.5 billion disbursement for Argentina on Wednesday. The news was confirmed by Economy Ministry sources, ahead of Sergio Massa’s meeting with the IMF’s Managing Director, Kristalina Georgieva.
The funds will allow the country to repay the loans it had obtained from the Andean Development Corporation (CAF) and the Qatar Fund between late July and early August to meet its obligations with the IMF. It should also enable the central bank to settle a portion of the yuan that was taken out from Argentina’s currency swap with China to pay the international organization.
CAF had provided $1 billion and the Qatar Fund provided another $775 million for Argentina to avoid a default with the IMF. Approximately $1.7 billion was used from the swap, which means that if the government were to repay all these loans, approximately $4 billion would be left over from the $7.5 billion approved by the IMF today.
This amount would barely cover the payments due to the Fund in September ($900 million) and October ($2.7 billion). That could explain why, in recent weeks, the Argentine government had sought to negotiate a larger disbursement this week. Last week, a senior source from the Economy Ministry even speculated about the possibility of increasing the amount to $8 billion, with an additional $2.25 billion in the first week of November.
A recent report from economic consultancy EcoGo suggests that the government may only have to settle $800 million from the swap for now. In that case, after repaying CAF, the Qatar Fund, and the yuan loans, the economic team would have a net balance of some $4.9 billion.
But from that amount, EcoGo points out that “$3.4 billion would be used to make an early payment of the October capital installment and the September interest.” This, according to the consultancy, would leave $1.5 billion available to intervene in the foreign exchange market, although they noted that this is not formally a part of the agreement with the IMF.
