BUENOS AIRES (Reuters) – Argentina and China have extended the activated portion of their main currency swap line worth the equivalent of $5 billion until July 2026, Argentina’s central bank said on Wednesday, allaying fears it may have to make large payments next year month. .
The South American country’s central bank said in a statement it would extend the active tranche of a larger, long-standing $18 billion swap facility for a 12-month period and then gradually reduce it to zero by mid-2026.
The embattled country faces the prospect of billions of dollars in swap repayments this month and next unless it agrees to an extension with China, a potential headache for libertarian President Javier Miley with depleted reserves.
The extension of the swap line will allow Argentina’s central bank (BCRA) to manage payment flows “at critical times for the domestic economy,” the bank said in a statement.
“This reinforces the commitments made by BCRA’s current management to address the external payments crisis while fully complying with the contractual commitments previously agreed with all its colleagues,” it added.
A currency swap line is a lending agreement between central banks that gives the recipient country access to an agreed amount of funds in a foreign currency such as dollars or euros.
Argentina also has a $44 billion program with the International Monetary Fund (IMF) that includes economic targets for economic growth, inflation and reserves. The government said it would begin negotiations with the IMF on a new program.