Mexican President Andres Manuel Lopez Obrador (AMLO) said that his administration could use part of the recently approved $12bn IMF reserves to pay Mexico’s debt. The IMF on August 2 approved a $650bn allocation of IMF Special Drawing Rights (SDR) effective August 23. AMLO said that Mexico should receive around $12bn of the allocation. Without laying out which debts the government is considering to repay, AMLO said, “The reserves have grown a lot and they pay very little interest…we could use these resources to pay debt in advance”.

However, deputy central bank governor Gerardo Esquivel wrote on Twitter that the funds are part of the bank’s international reserves and under Mexican law, the funds cannot be used to pay debt. Carlos Capistran, head of Mexico and Canada economics at Bank of America also adds “If that door is open then the government would be able to use all the reserves as well and the market may not like that.”

Mexico’s 4.15% 2027s were stable at 114.3 yielding 1.5%

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