Mexican President Andres Manuel Lopez Obrador said on Wednesday that the government could use the cash provided by the International Monetary Fund (IMF) to pay off its debts, yet, a member of the Board of Directors of the Bank of Mexico rejects the idea.
The IMF said earlier that its board of governors approved the allocation of $650 billion in special drawing rights (SDRs), and said that the largest-ever distribution of cash reserves will take effect on August 23.
Lopez Obrador said at a regular press conference that Mexico should receive about $12 billion from the IMF, however, it was not clear whether the money could be used to pay off debts.
Bank of Mexico board member Gerardo Esquivel poured cold water on Lopez Obrador’s proposal.
SDRs are not a currency, but an international reserve asset. In Mexico, by law, international reserve assets cannot be used to pay off debts.
The IMF’s SDR scheme would distribute reserves to all 190 member states in proportion to their ownership, with the lion’s share allotted to G20 nations, which includes Mexico.
The SDR is the unit of exchange in the International Monetary Fund, consisting of the dollar, the euro, the yen, the pound sterling, and the yuan. To spend it, countries must arrange an exchange of base currencies.