(Bloomberg) -- Mexico's President Andres Manuel Lopez Obrador said on Thursday he'll seek central bank approval to use $12 billion in International Monetary Fund reserves to pay down debt, as he presses ahead with austerity.
Lopez Obrador thanked bank Governor Alejandro Diaz de Leon for being open to the idea of using the windfall, which is being transferred to the monetary authority from the IMF, to prepay liabilities. He declined to comment on Diaz de Leon's prior remarks that the government must purchase the reserves from the bank.
Read more: Mexico Would Have to Buy Reserves to Pay Debt, Banxico Says
AMLO, as the president is known, has made austerity a cornerstone of his administration and has vowed not to raise debt levels. His plan to use the IMF funds was proposed by his new finance minister and long-time confidant, Rogelio Ramirez de la O, who is leading the project.
“The money shouldn't just be stored away,” AMLO said. “That would be a loss, because it earns very little interest, while the government has to pay high interest on its debt.”
He added that the decision will depend on the central bank, known as Banxico, whose autonomy his government will “always respect, always.”
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