By KELIN DILLON
On the morning of Wednesday, Aug. 18, Mexican President Andrés Manuel López Obrador (AMLO) revealed he would formally request the Central Bank of Mexico (Banxico) to transfer the Special Drawing Rights (SDR) funds given by the International Monetary Fund (IMF) to Mexico’s treasury.
The IMF Board of Governors previously approved the distribution of $650 billion worth in SDR to its member countries to help strengthen their response against external shocks, with $12 billion of that going directly to Mexico.
“The formal proposal will be made to the Bank of Mexico so that the public treasury benefits and the people benefit,” said AMLO at the time, likewise revealing the plan to use the funds to pay off some of Mexico’s outstanding debts.
López Obrador’s announcement came with pushback, as the SDR funds are not supposed to be used for this purpose.
“SDRs are not a currency, they are an international reserve asset. And in Mexico, by law, international reserve assets cannot be used to pay debt,” said Deputy Banxico Governor Gerardo Esquivel on his Twitter.
In response, AMLO then called Esquivel “an ultra-technocrat” and said “you can’t use (the funds) because you don’t want to.”
During the IMF’s announcement of the SDR distribution on Aug. 2, the institution said that the funds are reserve assets that cannot be used as legal tender and cannot be used for buying or selling between individuals.