The government is set to confront an interest payment of approximately US$800 million to the International Monetary Fund on Monday, amidst constrained dollar reserves in Treasury accounts and a pending approval for a new disbursement. To fulfilll its obligation, the Economy Ministry is contemplating the utilisation of its dollar deposits or the acquisition of foreign currency from Argentina’s Central Bank (BCRA, in Spanish). The payment arrives shortly after IMF staff finalised a technical agreement with Argentina regarding the third review of the nation’s program, potentially paving the way for a disbursement of around US$900 million. However, the funds still require approval from the IMF’s Executive Board, which is anticipated in early December, along with the completion of the outstanding measures agreed upon with Argentine authorities. As per the most recent data, on Wednesday, October 28, the Treasury held US$851 million in foreign-currency deposits at the Central Bank, which is marginally above the amount due this week. If those funds were allocated to settle the US$800 million, the residual balance would be roughly US$51 million.
Consequently, market participants have not dismissed the potential for the Economy Ministry to acquire dollars from the BCRA in order to sustain a degree of liquidity in its accounts. The Treasury also possesses approximately 8.9 trillion pesos in deposits, which could be utilised to acquire foreign currency. Consultancy firm 1816 cautioned that the government’s accessible foreign-currency reserves were nearly equivalent to the required amount to fulfilll the obligation, suggesting that a dollar acquisition from the Central Bank is a probable course of action. The situation follows a week in which the Treasury reportedly intervened in the foreign-exchange market to moderate the wholesale exchange rate ahead of the setting of the benchmark rate used to settle maturities on dollar-linked bills (Lelinks). Private-sector estimates indicate that the government sold roughly US$100 million on Monday and subsequently repurchased US$44 million. A potential purchase of dollars from the BCRA would have implications for net international reserves, as it would involve a transfer of foreign currency from the monetary authority to the Treasury.
In contrast, utilising dollars that are already deposited at the Central Bank would yield a distinct accounting effect on the reserve position. In addition to determining the sources of funding, the government will also need to acquire Special Drawing Rights, the international reserve asset utilised by the IMF for its operations. In prior payment rounds, Argentina sought assistance from the United States Treasury for their acquisition. The payment coincides with a new phase of negotiations between the government and the International Monetary Fund. Last week, the Fund’s technical staff endorsed the third review of the agreement; however, final authorisation for the disbursement is still pending. The IMF intends to present the review to its Executive Board in early December, following the completion of the agreed measures. If approved, Argentina would receive a disbursement of nearly US$900 million, equivalent to approximately 600 million SDRs. Outstanding commitments encompass a tax reform proposal designed to diminish tax exemptions while generating fiscal space to advance reductions in export duties and the taxation of bank credits and debits.
The IMF anticipates that the Revenue and Customs Control Agency (ARCA, in Spanish) will implement a formal registry of the primary tax-compliance risks by December, focusing specifically on large taxpayers. Another commitment is to advance a reform of the Fiscal Responsibility Law to integrate the principle of zero deficit. Meanwhile, the IMF continues to observe various government initiatives, including the approval of the 2027 budget, reforms at the Central Bank, and efforts to enhance capital markets, broaden mortgage financing, and promote investments under the Large Investment Incentive Regime (RIGI, in Spanish). IMF spokesperson Julie Kozack emphasised the importance of continuity in the government’s economic policies, asserting that adhering to the current trajectory would contribute to a reduction in country risk. The institution also emphasised the necessity of facilitating the remonetization of the economy and encouraging prudent credit expansion.
