Argentina uses yuan for the first time to settle part of its IMF debt
The lack of dollars in its central bank’s international reserves forced the government of Argentina to make an unprecedented decision this Friday:
For the first time, it met a payment obligation with the International Monetary Fund (IMF) in Chinese yuan worth the equivalent of one billion US dollars - with a further $1.7 billion paid in Special Drawing Rights (SDR), the IMF’s currency.
This is the first time that President Alberto Fernández's administration resorts to freely available yuan from the currency swap with China to pay the international organization.
This money was intended to finance imports from the Asian country - but officials had already anticipated that it could be put to other uses.
Argentina's trade deficit with China reached a record $9.5 billion last year, as the South American country's economy continued to recover from a "Macrisis" inherited from Fernández's right-wing predecessor, Mauricio Macri (2015-19) - as well as a short but deep recession amid Covid lockdowns in 2020.
The "Argenchinese" swap, first signed in 2014 after Argentina was locked out of credit markets by vulture fund lawsuits, was since expanded - under both left- and right-wing administrations - to 130 billion yuan ($18.8 billion).
At: https://english.elpais.com/economy-and-business/2023-07-01/argentina-uses-yuan-for-the-first-time-to-settle-part-of-its-imf-debt.html
Argentine Economy Minister Sergio Massa shares his country's football jersey with a Chinese State Grid official during a visit to Shanghai in May.
Argentina's severe hard currency shortage - compounded by a 100-year drought - has forced the country to rely on its growing Chinese yuan swap portfolio to finance both Chinese imports and its $190 billion foreign public debt - which doubled under the Trump-backed Mauricio Macri administration (2015-19) but has since stabilized.
