Reserves pledged: The government paid US$2.3 billion to the IMF and bondholders for the swap

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The government has awarded US$ 2.315 million to pay the IMF deadlines and pay the interest on the bonds entered the debt swap in 2020. The transaction between last Friday and this Monday has had an impact on reserves, amid the government’s efforts to raise dollars in a context marked shortage of foreign currency.

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According to data from the Central Bank, gross reserves closed at $44.425 million, a decrease of US$1.057 million compared to Friday. But also, according to private calculations, payments to bondholders and other transactions reduced net reserves from over $7,000 million to $6,000 million. This is the indicator that the Fund looks at to assess the reserve target.

The largest outlay corresponded to payment of US$1,296 million to the Fund to repay the US$44,000 million loan contract in 2018. In this case it was canceled with US$6,000 million special drawing rights (SDRs) received by the agency in late December, following the approval of the third revision of the 2018 debt refinancing program.

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The coupon intended for private creditors requested US$ 1,019 million. This is the semi-annual payment of the “step up” bonds of private debt renegotiated under the management of Martín Guzmán in 2020. Of the total, $664 million was settled on Friday for foreign law bonds and $355 million this Monday for bonds of local law, according to the Ministry of Economy.

“Step up” refers to the staggered interest structure: they start paying a low coupon that rises over time with semi-annual payments on January 9 and July 9 of each year. For example, the 2030 Global Bond (AL30) offers a rate of 0.125% between 2020 and 2021, 0.50% through July 2023, 0.75% through July 2027, and 1.75% until July 2030.

interests decreased the level of net reserves, those that do not include swaps, deposit insurance, dollar deposit reserve requirements and other liabilities, according to the Fund. “The IMF payment is made with the SDRs of the last disbursement (does not affect net reserves), payment to private creditors concerns them“, said Pedro Martínez, economist at PxQ.

The Ministry of the Economy has confirmed the “impact” of the expiries on the reserves. To strengthen the currency stock, Central confirmed on Sunday the extraordinary activation of the extension of the “swap” with China for 5,000 million dollars. The body reported that it will serve to “offset exchange transactions” and that the the resources will be “freely available”.

Sergio Massa’s team closely monitored the flow of dollars and the effects of the drought. For private analysts, the climate phenomenon could reduce exports by 10,000 million dollars in 2023, although an easing of energy imports could moderate the global impact by up to $7,000 million, with negative effects on business and revenues.

The economy monitors the situation daily due to the drought and has informed the agri-export sector that it expects “change”. The expectation is that in the next 7 or 8 days there is an improvement with the arrival of the rains. If not, the next few days will be pretty tough for crops planted, production projections and agricultural exports.

The BCRA reduced the level of foreign exchange purchases in January and accumulated a net positive balance of US$64.5 million. The change came after the soy dollar ended in December. Without this exchange rate regime, which for economists implies a “disguised” devaluation, international reserve balances were negative in 2022.

Friday, however, $647 million and $20.5 billion annually, including interest, will have to be paid to the IMF.

Source: Clarin

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