AMLO wants to use Mexico’s IMF funds to repay expensive debt

Mexico’s finance ministry said on Sunday that it will speak to the central bank to allow the government to take advantage of a recent allocation of more than $12 billion in special drawing rights (SDRs) from the International Monetary Fund (IMF).

President Andres Manuel Lopez Obrador had proposed earlier this month that the money could be used to pay down debt that carries high-interest rates, sparking a debate over the appropriate use of these financial instruments.

It is still unclear whether those funds could be used to repay debt.

The finance ministry said in a note that $12 billion has been allocated to the international reserves, which are managed by the central bank, or Banxico, of Latin America’s second-largest economy.

“The objective of this exchange is fiscal discipline: by paying down this debt, we are saving costs as well as bringing down debt levels as a consequence, which is positive for our budget,” it said.

SDRs are the IMF’s unit of exchange, made up of dollars, euros, yen, sterling, and yuan. To spend them, countries must arrange an exchange for underlying currencies.

The finance ministry also said that IMF funds provided to Mexico will not be included in the 2022 budget.

Source: El Financiero