UPDATE 1-Argentina makes $1.9 bln payment to IMF amid race for new deal

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BUENOS AIRES, Sept 22 (Reuters) – Argentina made a near $1.9 billion payment to the International Monetary Fund on Wednesday, two government sources said, as the South American grains producer races to agree a new deal with the lender to revamp the over $40 billion it still owes.

The payment, part a failed loan deal from 2018, was made with funds Argentina received from the IMF’s Special Drawing Rights (SDR) program, distributed in August to help members combat the economic impact of the coronavirus pandemic.

“Today the payment of the maturity was completed with the IMF, which will be reflected in the international reserves,” said one source from the central bank, who added reserves levels were at about $43.178 billion.

The country’s official Telam news agency confirmed that SDR funds would be used to facilitate the payment of $1.885 billion. Argentina received the equivalent of $4.334 billion in SDRs, the IMF’s reserve asset, official sources told Reuters .

Argentina next owes the IMF $400 million in interest in November, and about $1.9 billion in principal in December, according to a schedule of its debt obligations.

The South American country is in the midst of negotiations with the IMF to restructure its debt, amid rampant inflation, political uncertainty, capital controls, high poverty levels and an economic malaise that has been sharpened by the pandemic.

“The payment to the IMF has to do with responsibility. The way forward is to build an agreement in which we say what is good for Argentina,” Economy Minister Martín Guzman said in radio statements on Wednesday.

The government, which was rattled by a painful primary election loss earlier this month, sent its 2022 draft budget to Congress last week, which it said was based on the assumption of a new deal being reached with the IMF.

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