The Government continues to negotiate with the IMF to reach a new agreement that allows it to restructure the loan for around US$45.000 millones that Argentina requested in 2018.
Unlike what happens with a debt swap with private creditors, which is refinanced through an agreement of the parties and with the subsequent issuance of new bonds, the multilateral organization does not admit this type of operation. On the contrary, in the case of not being able to fulfill its commitments, the country in question must sign a new agreement.
While the Argentine government continues to dialogue with the IMF technicians, the Treasury turns in time and forms the payments, according to the agreed schedule. So far in 2021, the Government has five disbursements to cancel interest and one to reduce the principal owed.
How debts with the IMF are paid
Both the disbursements made by the IMF to the countries and the payments made by the debtors to the body are made in “Special Drawing Rights (SDR) ”, Which functions as the entity’s unit of account. “The SDR is an international reserve asset created in 1969 by the IMF to supplement the official reserves of the member countries ”, defines the multilateral organization on its website. In fact, when the multilateral makes an allocation of SDRs, they are recorded in the Central Bank’s reserves, which are also impacted when making payments to the IMF.
The value of SDR is determined based on a coin basket that must meet two requirements:
- It must be issued by a member country of the IMF or a monetary union that includes members of the IMF. Also, the issuer of that currency must be one of the five main exporters of the world.
- The currency Must be from free use, which means that it is widely used to settle international transactions and that it is widely traded in the main exchange markets. In addition, these types of currencies can be used in the financial operations of the IMF.
The composition of the currency basket is reviewed every five years and is currently made up of the dollar American, the euro, the yuan, the yen and the libra sterling. The value of the SDR determines itself daily from the exchange rates of those currencies in the market.
From those quotes, you can convert to dollars disbursements to and from the IMF. For example, at the close of this note, one SDR equaled US $ 1.412290. This conversion rate explains the variations that can be found between amounts owed to the IMF expressed in US currency, but estimated at different times.
How much Argentina owes the IMF
In addition to the US $ 1.3 billion that it turned over last year, so far in 2021, the Government already made five interest payments to the IMF. Regarding interest, the Treasury paid US $ 314 million in February; US $ 316 million in May; US $ 349 million in August; $ 137 million in September and $ 388 million this week. In addition, in September it canceled a capital installment for US $ 1,884 million. According to the data published on the IMF website, in December Argentina will have to pay another capital installment for US$1874 millones.
Read also: The cost of agreeing with the IMF in March: Argentina must pay it the same as it allocated to the pandemic in 2020
Despite the payments that have already been made, the same thing happens to Argentina with the IMF as with any debtor: at the beginning it paid interest instead of principal, still some US $ 44.905 million remain to be paid to the agency, of which US $ 41,324 million correspond to maturity of capital. Thus, Argentina will have to pay approximately a similar amount to the entire loan it received in 2018.
The stronger capital amortizations are planned for 2022 and 2023, which add maturities of more than US $ 38,000 million, similar to all the reserves that the Central Bank has today. If it does not get a new program with the IMF, next year Argentina would have to pay US $ 18,956 million. By 2023, meanwhile, expected disbursements would add another US $ 19,205 million. Then, in the period from 2024 to 2036, the Argentine government should pay about US $ 2.23 billion per year.
Within the Government they seek to close the new program, in which they do not rule out that the IMF return to Argentina the payments you made during this time. Another alternative is to get a deal similar to what was done with the Paris Club: a time bridge that avoid making disbursements, but, at the same time, allow the Government to avoid the default.
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