Argentina Taps $2.3 Billion Reserves to Pay Foreign Debt
In exchange, the central bank will receive dollar- denominated, non-transferable 10-year Treasury notes that pay the same interest as the bank receives on international reserves up to a maximum of Libor minus one percentage point, the gazette said.
About $11.3 million of the $2.3 billion are to make up for payments that fell due last year that had been under-estimated, according to the gazette.
Central bank officials didn’t return phone calls seeking comments.
President Cristina Fernandez de Kirchner, unable to borrow from international markets since the country’s 2001 debt default, has used reserves since 2010 to pay international debt. The government plans to use about $8 billion this year from $5.7 billion last year, according to the budget law.
The use of reserves to pay debt, plus capital outflows, caused central bank savings to fall to $40.6 billion on March 27, the lowest level since 2007. In early 2006, Fernandez’s husband and predecessor Nestor Kirchner used reserves to pay off its $9.5 billion debt to the International Monetary Fund, a move he said was giving the country “liberty to make national decisions.”
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