BUENOS AIRES (Reuters) – Argentina and China have renewed the activated portion of a major currency swap line for the equivalent of $5 billion until July 2026, the central bank said on Wednesday, dispelling concerns that they may have to make large installments over the next month. .
The South American country's central bank said in a statement that it will renew the active tranche of a larger, long-term swap line, worth $18 billion, for 12 months, then gradually reduce it to zero by mid-2026.
The embattled country faced the prospect of repaying billions of dollars in swaps this month and next if it did not agree to an extension with China, presenting a potential headache for Liberal President Javier Miley as reserves are depleted.
The extension of the swap line will allow the Central Bank of Argentina (BCRA) to manage payment flows “at critical times for the local economy,” the bank said in the statement.
He added that this “reinforces the commitment made by the current management of BCRA to overcome the external payments crisis, in full respect of the contractual obligations previously agreed upon with all its counterparts.”
A currency swap line is a loan agreement between central banks that gives the recipient country access to an agreed upon amount of funds in a foreign currency such as dollars or euros.
Argentina also has a $44 billion program with the International Monetary Fund, which includes economic targets on growth, inflation and reserves. The government said it would open talks with the International Monetary Fund on a new programme.