Yuan Instead of Dollar: Argentina Repays IMF Debt in Chinese Currency

Argentina used the Chinese yuan and special drawing rights (SDRs) at its disposal to pay off part of its debt to the International Monetary Fund (IMF). Buenos Aires said it had to resort to the yuan for the lack of hard currency and primarily dollars in Argentina’s international reserves. This was reported by the Argentine newspaper La Nacion.

Special drawing rights are one of the components of foreign exchange and gold reserves administered by the central banks of the International Monetary Fund member countries. The concept of SDR was introduced by the Jamaica Accords of July 28, 1969. The IMF distributes SDRs among its member states only when it feels an urgent need to increase global reserve assets.

According to La Nacion, “the payment equivalent to $2.7 billion was made in yuan on June 29, and the next day the IMF confirmed the credited payment.”

Again, according to La Nacion, “next week, an Argentine delegation will travel to the United States to continue negotiations on the conditions of future payments to the Monetary Fund.”

For several years now, Argentina has been living in a situation of almost constant economic crisis. The volume of foreign exchange and gold reserves denominated in dollars fell to a critically low level. This happened because the drought and the resulting famine have reduced the country’s agro-food exports to the limit.

In 2018, the IMF approved a $50 billion loan to Argentina. This was done to “help the country cut its state deficit amid runaway inflation.” In the same year, the loan amount was increased to $56.3 billion, but ultimately Argentina received only $44 billion from the IMF. In March 2022, the Argentine Parliament ratified an agreement with the IMF on debt restructuring for about $45 billion.