Economy Minister Sergio Massa will travel to China next week in a bid to free up more cash from a currency swap line that could help stem a peso sell-off before this year’s presidential election.
Massa, who participated in campaign-style events this weekend, will arrive in Shanghai May 30 and then head to Beijing for meetings on June 2, according to an official itinerary sent by Argentina's Economy Ministry on Saturday.
Facing inflation over 100 percent, Argentina’s Central Bank has no liquid cash reserves left, according to local economists’ estimates. With the official peso exchange rate down 25 percent so far this year, one of the government’s last-resort tools to prevent a more severe peso devaluation is Argentina’s existing China swap line worth 130 billion yuan (US$18.4 billion).
Massa will meet with Yi Gang, governor of the People’s Bank of China, to discuss the “renewal and expansion” of the swap line, according to Argentina’s statement. Although the money sits in Argentina’s Central Bank reserves, only a portion, about US$5 billion, is actually allowed to be used as of now to pay for imports or pay down debts. Massa is seeking access to a greater portion of the swap.
Talks with China come as Massa is also renegotiating Argentina’s US$44-billion programme with the International Monetary Fund, aiming to get more cash up front from the Washington lender after a record drought exacerbated the country’s economic crisis.
In Beijing, Argentina’s economic chief will also meet with Chinese Finance Minister Liu Kun. Massa will be accompanied by Argentine Central Bank Chief Miguel Pesce and congressman Máximo Kirchner, among other officials in a large Argentine delegation.
Argentina holds a key primary election August 13 with a general vote October 22. Massa is widely expected to be among the Peronist candidates.
by Patrick Gillespie, Bloomberg