The International Monetary Fund (IMF) and Argentina have reached a technical agreement for US$20 billion over four years. The initial disbursement — the most substantial — will be determined shortly by the multilateral lender’s executive board.
However, in just two months, President Javier Milei’s government will also need to consider making a political gesture to China if it wants to maintain Argentina’s existing currency swap, already under US scrutiny and representing more than half of the nation’s gross reserves.
Sources with close ties to Xi Jinping’s government told Perfil that "the only news" China has received about the swap has come via Mauricio Claver-Carone, the US State Department’s envoy for Latin America.
The former Inter-American Development Bank official stated recently that, for Washington, the priority is ensuring the new IMF programme does not strengthen China’s position through swap credit lines, which he described as "extortionate."
Li Qiang, spokesperson for China’s Foreign Ministry, downplayed the remarks, stating Tuesday that currency swaps between central banks contribute to the "economic and financial stability" of the country.
He emphasised that the Asian giant’s support "is well received by the Argentine government."
Fine print
The details of the technical agreement are yet to be released by the IMF, which is expected to do so in the coming days.
Particular attention will be paid to any new rules for exchange rate regime and other conditions, such as whether the US$18 billion agreement with the People’s Bank of China will be terminated or revised. Should that occur, Argentina would have to repay the US$5 billion activated in 2023 immediately — at a time when the Central Bank is struggling to rebuild its reserves.
Since Foreign Minister Gerardo Werthein assumed office, he has not visited Beijing. Meanwhile, in the context of the trade war reignited by Donald Trump’s tariff hikes, Milei’s strong alignment with his US counterpart — despite having reaped no trade benefits so far — could become problematic as the deadline approaches.
The focus is whether the La Libertad Avanza administration decides to renew the currency swap or if the IMF programme inserts a clause requiring its termination.
Beijing’s strategy with such swap arrangements aims at increasing its presence in international markets by boosting the use of the yuan (renminbi) as a currency of exchange, thereby positioning itself as a lender of last resort — a role currently held by the IMF. This move has irked Washington, which is keen to preserve the US dollar’s dominance in global trade.
Year of waiting
China has been waiting for some form of gesture since the La Libertad Avanza administration took office in December 2023.
"With strategic patience, it granted Milei’s government a one-year grace period for that," said a former official with ties to the Asian country.
This decision came despite Milei’s previous insults on the campaign trail, his declared refusal to "do business with communist dictatorships" and undiplomatic comments made by former foreign minister Diana Mondino, which offended Chinese authorities.
A last-minute visit, just before repayments were due in June 2024, saw Central Bank Governor Santiago Bausili and Finance Secretary Pablo Quirno travel to negotiate a solution regarding Argentina’s obligations — specifically, the interest on the first US$5 billion tranche already utilised.
Although the Central Bank presented the outcome as a "renewal" 10 months ago, it was in fact a one-year extension granted by China, allowing the Milei administration to begin monthly repayments from July 2025 and complete them in 2026.
Since Milei’s election victory in November 2023, China has kept US$6.5 billion frozen, awaiting progress in talks with a government that has never shown signs of improving bilateral relations.
Suspension of the swap would mean not only losing access to more than half of the current gross reserves (totalling approximately US$24 billion) but also the loss of a key financing channel — just as the government approaches the critical stage of the fledgling IMF programme. It had hoped to reach this point with a country risk of 400 basis points – it currently stands at more than double that.
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