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Argentina strikes deal with People’s Bank of China to secure US$1.7 billion in yuan for IMF debt
- Currency swap to help Buenos Aires make good on US$2.7 billion owed, with remaining US$1 billion balance covered by Development Bank of Latin America
- No immediate economic benefits for Beijing, but deal advances Chinese government’s hope that renminbi is more widely used globally, analyst says
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Igor Patrickin Washington
The Argentine government has reached an agreement with the People’s Bank of China to secure US$1.7 billion in yuan through currency swaps to meet its US$2.7 billion payment obligations to the International Monetary Fund, its economy minister said on Monday.
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The remaining balance of the payment will be covered by US$1 billion loaned by the Development Bank of Latin America, also known as CAF, based in Caracas, Venezuela.
Under the arrangement, Argentina had deposited pesos with the PBOC, which granted renminbi in return. Buenos Aires was then able to make its payment to the IMF without having to draw upon dollar reserves, now estimated by the Central Bank of Argentina to be worth minus US$8 billion.
Sergio Massa, the Argentine economy minister, thanked the PBOC and Chinese government “for making the decision to authorise the disbursement”, saying it would. “ensure that Argentina can continue its exports while meeting its payment obligations” to the IMF.
The agreement would allow Argentina to meet its IMF obligations “without using a single dollar of its reserves”, Massa added.
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