Reuters
- Argentina secured $7.5 billion from the International Monetary Fund on Wednesday.
- Some of the funds will be used to partially pay China back, sources told Reuters.
- It will also be used to reimburse Qatar and the Development Bank of Latin America.
The $7.5 billion disbursement that Argentina secured from the International Monetary Fund this week will go towards partially repaying China for currency swap line borrowings, sources told Reuters.
As soon as this week, Argentina is expected to use some of its bailout money to funnel the equivalent of $1.7 billion back to the People's Bank of China, after tapping $2.8 billion from the swap line in recent months.
The swap line, first established in 2009, has been a saving grace for Buenos Aires amid a severe dollar shortage and a financial crisis roiling its economy. Apart from helping meet repayment requirements on a separate 2018 IMF loan, the $18 billion line has also been used to pay for imports into Argentina.
Argentina is also using the latest IMF disbursement to pay back other lenders. That includes $1 billion borrowed from the Development Bank of Latin America (also known as CAF), and $775 million in special drawing rights from Qatar.
"The funds that will be disbursed today go in part to Qatar, to CAF and will lower the level of how much has been used from the swap line. Qatar will be paid in SDRs, China in yuan," a source at Argentina's central bank told Reuters, adding that the CAF loan will be repaid in dollars.
The IMF's board approved the disbursement on Wednesday, which is part of a $44 billion program that is mostly being used to pay off an earlier IMF bailout. The next review is scheduled for November.
Fall will also be notable for Argentina's upcoming presidential election, with mounting uncertainty of how this may impact the country's commitment to pay back the IMF. Meanwhile, the eventual winner will also have to contend with the country's triple-digit inflation and a collapse in the local peso.
Frontrunner Javier Milei has garnered support with an idea to ditch the peso for the US dollar, though this would be met with a number of legislative challenges.