ARGENTINA - BUENOS AIRES. Argentina has been forced to use money disbursed by the International Monetary Fund (IMF) to pay off maturing debts, a Treasury spokesman told Reuters on Thursday, underscoring efforts to avert a damaging default.
The government has used $1.9 billion of the IMF money to pay off debt on short-term dollar-denominated Treasury Bills (Letes) and local currency Lecaps, along with debts with local lenders and regional development banks, the Treasury spokesman said.
The money was from a $7.2 billion tranche received in June last year as part of the biggest standby financing agreement ever agreed with the IMF. The tranche was intended to be "precautionary" and help shore up the reserves of Latin America's third-largest economy.
Argentina is grappling with a major debt crisis after a market crash in August hammered its peso currency and sovereign bonds, however, forcing the government of President Mauricio Macri to roll out plans to delay payments on around $100 billion of debt.
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"These resources are part of the loan agreed with the IMF, they are Treasury deposits, intended for budgetary reinforcement, of a precautionary nature," the Treasury spokesman said, asking not be identified by name.
Argentina struck a $50 billion deal with the IMF in June last year, raised to $57 billion in October. The IMF said then Argentina would no longer treat the funds as precautionary, which had originally been the intention.
Argentina is in talks with the fund over the release of a $5.4 billion portion of money. The decision has been delayed amid the country's economic turmoil and with presidential elections later this month.
"While talks go on with the IMF related to the fifth review of the standby deal and the new disbursement, the government is making use of its resources to meet various budgetary and financial commitments," the Treasury spokesman said.
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IMF support is key for Argentina, which is dealing with high inflation levels and a peso currency that has lost around a third of its value this year.
The IMF said recently it remained fully engaged in its relationship with Argentina. The fund will meet for talks with Argentine officials, including Treasury Minister Hernan Lacunza, later this month.
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