Monday, October 2, 2023

Welcome to Latam Insights, your one-stop source for the most significant crypto and economic happenings across Latin America over the past week. Today’s highlight revolves around Argentina’s intention to clear some of its International Monetary Fund (IMF) debt using the Chinese yuan. Simultaneously, Bolivia has already adopted the Chinese yuan for its international payments. Plus, Sazmining has revealed plans to begin mining operations in Paraguay.

Argentina to Pay off IMF Debts Using Chinese Yuan

The Argentine government plans to meet some of its obligation to the International Monetary Fund (IMF) via the Chinese yuan. Reports from sources close to Economy Minister Sergio Massa confirm that the $3.4 billion due this July will be covered using “CAF funds, the yuan, and other financing means.”

The Argentine administration has recently secured a “bridge loan” of $1 billion from the CAF (the Latam Development Bank), effectively borrowing to service its outstanding IMF debt.

Assuming it proceeds, this won’t be the maiden instance of Argentina tapping into Chinese funds to fulfill its IMF obligations. In June, Argentina’s Central Bank paid $2.7 billion to the global organization, utilizing $1 billion in Chinese yuan and Special Drawing Rights (SDRs) for the remainder.

Argentina is expected to obtain a $7.5 billion loan from the IMF in August to tackle “situations of turbulence in the domestic market,” as stated by Massa.

Bolivia’s Central Bank Adopts Chinese Yuan for Transactions

Bolivia’s Central Bank has recently declared its commencement of international transactions using the Chinese yuan, despite lacking a Chinese bank branch on its soil. Economy Minister Marcelo Montenegro admitted to utilizing the Chinese currency for global payments without sharing further specifics.

According to Montenegro:

While a bank may not always be necessary to execute operations, having a Chinese bank or one within close proximity could undoubtedly streamline transactions.

In May, Bolivian President Luis Arce instructed the central bank to study the applicability of Argentina and Brazil’s use of the Chinese currency to Bolivia, amid a scarcity of dollars in the country.

Sazmining Unveils Plan to Start Mining Operations in Paraguay

Sazmining, an American renewable Bitcoin mining hosting firm, has announced plans to establish a new facility in Paraguay, near the Itaipu Dam. The facility, set to host user-owned ASICs, is scheduled to commence operations in September.

Sazmining’s interest in Paraguay stems from the nation’s inexpensive energy prices and the renewable nature of its energy, primarily hydroelectric.

Kent Halliburton, Sazmining’s President and COO, remarked:

Sazmining is committed to building a more sustainable and progressive future by investing in electrical infrastructure that will serve Paraguay for many generations to come.

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Frequently Asked Questions (FAQs) about Latam Financial Developments

How is Argentina planning to settle its IMF debt?

Argentina plans to settle part of its IMF debt by using the Chinese yuan. Along with yuan, the $3.4 billion that must be settled this July will be made using CAF (Latam Development Bank) funds and other sources of financing.

Is Argentina the only country in Latin America using the Chinese Yuan for settlements?

No, Bolivia’s Central Bank has also started using the Chinese yuan for its international transactions. This move has been made even without having a Chinese bank branch in Bolivia.

What is Sazmining’s new project in Paraguay?

Sazmining, a U.S.-based renewable Bitcoin mining hosting company, announced the construction of a new mining facility in Paraguay near the Itaipu Dam. The facility, set to host user-owned ASICs, is projected to start operations in September.

Why did Sazmining choose Paraguay for its new facility?

Sazmining’s interest in Paraguay is primarily due to the country’s low energy costs and the renewable nature of its energy, which is largely hydroelectric.

What does Argentina plan to do with the loan from the IMF in August?

The loan of $7.5 billion from the IMF to Argentina is meant to intervene “in the case of turbulence situations in the national market,” according to the country’s Economy Minister Sergio Massa.

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