Due to rate hikes in the world, more dollars are leaving than expected in payments to the IMF

This is because the SDR rate is an average of the interest paid by short-term bonds in the currency markets that are part of the basket used to determine the credit agency’s unit of account. If the rates of the most important countries rise, that of the SDRs increases.

Argentina has to pay the Fund in the remainder of the year a total of US$1,670 million. He already paid him US$355 million in May and US$454 million in August.

By signing the agreement, started paying an interest rate of 4.25%which was made up of the 25 basis points that the SDR basic rate had in March, plus a 100 basis point margin applied by the IMF, to which is added the 300 points of surcharges that the country pays for exceeding its fee and for having delayed the payment of the 2018 agreement signed by Mauricio Macri.

But now, Due to the effect of the new monetary policies of the central banks to contain inflation, the rate paid by the country rose to almost 5.5%. It is made up of 145 of the basic SDR, plus the 100 basic points of the IMF, plus the 300 surcharge.

The OPC had estimated in Marchwhen the former minister Martín Guzmán closed the understanding for the Extended Facilities, annual payments of regarding $1.6 billion on average through 2027, with quarterly maturities on the first day of February, May, August and November.

But at that time the effect of the Russian invasion of Ukraine on the price of gas, oil and food was not clear at a global level, to which is added the amount of emission that was in the central economies during the covid-19 pandemic.

All this triggered prices worldwide, and the central banks began with the policy of raising rates. Already last March, in an analysis of the agreement, the OPC had warned that “in a context of greater inflationary pressures at a global level, there is a risk that a rise in international interest rates will impact the variable component of the IMF rate, which would increase the cost of financing for our country.” The projections of the technical office of Congress were fulfilled.

Héctor Torres, former Argentine representative before the IMF, told Ámbito that “Argentina pays the SDR rate, which varies daily and is currently 1.502%, to which is added a margin of 100 bp and surcharges of 300 bp.” Thus, the rate reaches 5.5% per year.

The OPC indicates that if a stable 5.45% rate is maintained, the country would have to pay US$2,122 million in interest to the IMF in 2023 and US$2,042 million in 2024. But in a scenario in which the rate doubles and goes to 291bp, the rate would rise to 6.91% for Argentina and the amounts would be US$2,751 million next year and US$2,650, in 2024.

Agustín Monteverde, consultant and academic adviser of the Fundación Libertad y Progreso considered that the phenomenon of rising interest rates will continue for a while. Referring to the situation of the Federal Reserve, following a lower rate of inflation than expected in the United States became known, he indicated that “The FED is going to slow down the rise depending on what is happening with inflation, but I don’t think it will suspend it”. However, he indicated that “for Argentina there is no cheaper lender than the IMF”. In this regard, Monteverde said that despite the rise in interest paid by Argentina with the agency “there are no more comfortable rates than these.”