Argentina won't use 'a single dollar' of reserves to repay IMF: Massa
Business
Says it’s result of extended swap deal with China, new loan from CAF
BUENOS AIRES (Reuters) – Argentina's Economy Minister Sergio Massa said on Monday the country will not use "a single dollar" of its own reserves to make a $2.7 billion repayment to the International Monetary Fund (IMF) due this week.
Massa, who is also a presidential candidate in this October's election, said in a speech that it would be possible because of an extended swap deal with China and a new loan from the Development Bank of Latin America (CAF).
Massa confirmed the repayment will be made with a $1bn bridge loan from CAF and $1.7bn coming from the second tranche of a swap with China, a move Buenos Aires recently made to complete part of its June payment to the IMF.
Argentina, which has been grappling with a severe economic crisis with sky-high inflation and falling central bank reserves, needed to avoid a default with the Fund, with maturities of $2.6bn due on Monday and almost $800 million due on Tuesday.
"I want to bring you peace of mind - Argentina is not going to use a single dollar of its reserves to pay today's maturity," Massa said in a televised speech.
The challenge for Argentina now, he added, is to "continue to take care of the (foreign currency) reserves while maintaining the economic activity levels."
Last week, Argentina reached a deal with the IMF on loan reviews to unlock $7.5bn, which still needs IMF Executive Board approval, eases some programme requirements because a devastating drought has created a "very challenging" economic environment in Argentina, causing some June-end financial targets to be missed.
Earlier, Argentina set new weaker trade-related exchange rates while keeping the official peso rate stable, in a push to meet expectations in its $44bn agreement with the IMF while avoiding a politically-costly devaluation.
Corn exporters will be able to sell their goods abroad at 340 pesos per US dollar, according to a government decree, a temporary rate to bolster exports until Aug 31. That is about 27 per cent weaker than the current rate of 268 pesos per dollar, which remained unchanged.
The government will also introduce a 7.5pc tax on some goods imports and a 25pc levy on imports of most services, with new FX rates at around 288 and 335 pesos per dollar, respectively, according to a government official.
The move came as the country faced delayed talks with the IMF on the fifth review of a $44bn programme, which was scheduled for June.
