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Argentina makes debt payment, draws down reserves

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(Globalpost/GlobalPost)

Buenos Aires, Dec 30 (EFE).- The government plans to make a final 2013 debt payment totaling $901 million, reducing the Argentine Central Bank's reserves to $30.3 billion, Cabinet chief Jorge Capitanich said Monday.

Argentina is making a $527 million payment on discount bonds, a $300 million pay-off on bonds issued to pay for gas purchases from Bolivia and a $74 million payment on debts to various entities, Capitanich said in a press conference.

"This is a strategic decision, the Office of the President decided today to pay off this debt taken on previously via the Debt Repayment Fund," the Cabinet chief said.

The accelerated use of reserves is one of the main problems affecting Argentina's economy since late 2011, when the country had record reserves of $52.65 billion.

The Argentine Central Bank's reserves have fallen over the past two years as the nation paid its rising energy bill, dealt with the consequences of currency restrictions imposed by President Cristina Fernandez's administration and managed the national debt.

The imposition of currency restrictions in October 2011 led to the growth of the black market, where dealers offer exchange rates that are much better than the official rate.

Argentina has a shortage of dollars and an excess of pesos due to an easy monetary policy, high government spending and a strategy of reducing the debt without foreign financing.

The South American country will finish the year with its reserves still above the psychologically important $30 billion level, but it has seen its reserves fall by $15 billion in 2013, Argentine Central Bank figures show.

http://www.globalpost.com/dispatch/news/agencia-efe/131230/argentina-makes-debt-payment-draws-down-reserves