He Central Bank (BCRA) reported that, finally, after several twists and turns, it managed to agree to renew the currency swap section with the People’s Bank of China (BPOC). Thus, the monetary regulator should not disburse the US$5,000 million (35 billion yuan) of the reserveswhich means a great relief for the Government.
Although still The specific conditions of the agreement reached are unknownWhat is known is that both regulators established that, after a period of 12 months (from June 2025) in which there will be no disbursements, the BCRA will begin to gradually reduce the activated amount of the swap. It will do so for another 12 months and, in this way, the aforementioned section It will be completely deactivated by mid-2026. Thus, the extension will be a total period of two years, of which one (the first) will be a grace period.
“It’s the same payment method that had been agreed upon when the “swap” section was activated in 2014 and everything would indicate that the agreement was subject to a change by Argentina in its foreign policy towards China. Surely, the issue of ending the rapprochement with Taiwan is going to be one of the conditions and also the continuity of the works on the agreed dams,” he tells Scope Noemí Brenta, doctor in economics and expert researcher in the history of Argentine external debt.
In this framework, this news is known after, This morning, the Chief of Staff, Guillermo Francos, met with the Chinese ambassador to Argentina, Wang Wei. In this framework, the agreement with the eastern country would have finally been closed. And, on the other hand, it comes after knowing the statements of the International Monetary Fund (IMF) that it expected the maturities to be rescheduled for the equivalent of about US$5,000 million.
The novelty surprised a large part of the market given that, as stated Federico Zirulnik, economist at the Scalabrini Ortiz Center for Economic Studies (CESO), “until a few months ago, it was what was expected throughout the economic arc, but the mismanagement of foreign policy and the noise in the chancellery shook the possibility of its renewal.” Thus, he celebrates the fact that he “has prevailed.”
China’s conditions and the framework of the swap agreement
And, in this sense, Brenta highlights that this agreement demonstrates China’s flexibility when negotiating with those countries that they consider strategic partners. “They see Argentina as a long-term strategic ally,” he says. From now on, we will have to see how the Government behaves going forward. “The important thing is that this gives relief to reserves and helps calm exchange rate tension,” he says.
And I know that the big problem was that the fact of having to pay China put Argentina in a weak economic situationnot only because it does not have sufficient reserves to meet that payment, but also because other international credit organizations could require due dates.
In fact, recently, it was said that Spain was threatening action before the Paris Club. The possibility was being considered that he would ask Argentina to pay the outstanding credits, if in the end it must cancel the swap with China. Another thing that was commented on in the city corridors was that the Chinese president, Xi Jinping, He wanted President Javier Milei to write him a personal request by letter for the postponement of the “swap.”
Swap agreement: the market sees it as good news
In this context, the market celebrates the BCRA announcement. “This is excellent news, since was a factor of concern for bondholdersbecause it cost a lot to rebuild international reserves from very negative levels, and the possibility that that payment would have to be made once again generated a lot of financial fragility,” he tells Ámbito regarding the announcement. Leonardo Chialva, CFA and partner at Delphos Investments.
So, the economist Claudio Caprarulo, director of Analyticaevaluates that “It would have been a serious mistake by the Government if it did not achieve its renewal“and highlights that the market had not incorporated or at least considered such a scenario more likely, which indicates that this novelty does not modify the consulting firm’s projections.
In the same sense, EcoGo economist Sebastián Menescaldi indicates that “the decision generates greater peace of mind given that avoids draining the dollar liquidity that the BCRA has“, which is trying to rebuild, after its abuse last year. Thus, it evaluates that this agreement is a good sign that avoids episodes of stress.
What Ignacio Zorzoli, Director of Finance of the Argentina XXI Center for Economic Studies (CEEAXXI)adds that, on the one hand, having postponed the expiration from now to 2026, “allows us to gain precious time to promote more structural reforms.”
A political boost
Zorzoli highlights that “reaching a successful conclusion in this type of bilateral negotiations, especially with China, represents a political boost also to the credibility of the Governmentjust at the moment when the Bases law could be approved in the Senate”.
Likewise, he comments that “Every dollar that the BCRA can rescue allows it to get closer to the objectives in time.” short and medium term, which are: getting out of the stocks, reducing the PAIS tax and turning off all types of alerts that put pressure on future monetary issuance”.
The national authorities seem to have taken a real dimension of the importance of China for the Argentine economy and that led them to look for a approach of positions. That, conjugated with a long-medium and term view related to strategic interests in the region and in the countryled to China’s willingness not to escalate the conflicts and to reach, under certain conditions, a new negotiated agreement that sustains the “swap.”
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