IMF spokesperson Julie Kozack confirmed on Thursday, July 13, that Argentina paid the IMF in Chinese yuan worth the equivalent of $1.1 billion, with a further $1.7 billion of its matured debt to the IMF disbursed in Special Drawing Rights. (Related: DE-DOLLARIZATION: China now uses the yuan for cross-border transactions more than it uses the US dollar.)
SDRs are reserve assets made up of a basket of the world's main currencies. It is considered the IMF's main currency due to its role in maintaining the fund.
"As we have stated in the past, the Argentine authorities continue to remain current on their financial obligations to the IMF," said Kozack in a press briefing. "The renminbi is one of the five freely usable currencies that members can and have used to settle their obligations with the IMF.
Argentina's decision to use the yuan comes as the country's foreign currency reserves plummeted due to a severe drought that has massively reduced grain exports, the country's major source of U.S. dollar earnings. Furthermore, the value of the Argentine peso has weakened under the weight of a whopping 109 percent annual inflation, which also represents a 44 percent drop in value against the U.S. dollar.
The recent payment also comes as the Argentine government is renegotiating the repayment of its debts to the IMF, noting that the previously agreed-upon goals are impossible to meet due to the impact of the drought. Argentina currently owes the IMF around $44 billion.
"Our team has been working intensively with the Argentine authorities to make progress toward the completion of the fifth review. And to help the authorities address a very complex and challenging situation," said Kozack.
"In terms of the details of those discussions, because the teams are still in discussion, I will not preempt those discussions, and I will not get into the details other than to say that the discussions are frequent, and they are aimed at advancing the program," Kozack added.
She also responded negatively to rumors that the choice to allow the debt repayment in the yuan came after the IMF received a letter from China allegedly strongarming it into allowing the transaction.
"With respect to a couple of the other questions on the letter, [our] understanding is that there is no such letter," she concluded.
This is the first time that Argentina has used freely available Chinese yuan from its currency exchange reserves to settle a transaction with an external international organization.
The Central Bank of Argentina (BCRA) recently signed a deal with China renewing its 130 billion yuan ($18 billion) swap line for another three years, doubling the amount of freely accessible funds from 35 billion yuan ($4.85 billion) to 70 billion yuan ($9.7 billion).
Argentine Minister of Economy Sergio Massa said the swap would be in a single tranche and freely available for any type of financial operation, including the repayment of debts to the IMF. The ministry added that Argentina would look to further promote the use of yuan in future transactions.
This recent deal with China is part of the communist nation's overall program of actively helping Argentina through its economic and currency crisis. Bilateral trade between the two nations has already surged.
In 2022, Argentina's imports from China exceeded its imports by nearly $10 billion, reaching a record high of $17.5 billion. Argentinian exports to China, meanwhile, amounted to $8 billion – a nearly $7 billion increase from exports to China in 2021.
The BCRA also recently announced that it has incorporated the yuan as a currency accepted for deposits in savings and checking accounts in the country's banks, signaling a departure from the American dollar as the sole official reserve currency of the country.
"Financial entities will thus be enabled to open bank accounts denominated in renminbi yuan," the bank stated.
Learn more about the collapse of the American dollar at DollarDemise.com.
Watch this episode of "World Alternative Media" as host Josh Sigurdson discusses how the IMF allowing payments in yuan is a signal that the Western world is bowing down to the rising Chinese empire.