By Kylie Madry
(Reuters) -Argentina renewed a $5 billion activated swap line with China for another year, the South American nation’s central bank said on Thursday, shoring up dwindling foreign reserves as even more funds from the International Monetary Fund could soon pour in.
Argentina has long held the $18 billion swap line with China, though the activated portion for $5 billion was set to wind down by June. The activated line will be renewed in full through mid-2026.
Without an extension, the Latin American nation would have faced billions of dollars in repayments in coming months, a headache for libertarian President Javier Milei.
While Milei has slashed public spending and wrestled inflation down to a monthly rate of 2.4% in February, the economy continues to struggle, with depleted reserves and high poverty rates.
The Chinese swap line’s renewal will allow the Argentine central bank to hedge risks as it transitions toward “consistent and sustainable monetary and exchange-rate policies” amid a tough global environment, the monetary authority said in a statement.
Argentina may receive an even larger disbursement from the IMF in the coming days. The board of the Washington-based lender is expected to vote on a $20 billion loan deal with Argentina on Friday, with an initial payout around at least $8 billion.
However, Argentina’s deal with China could put it in a tight diplomatic spot with Washington.
A top regional envoy from the administration of U.S. President Donald Trump last week slammed the swap line for the influence it gave China over Argentina.
China responded that the U.S. was looking to drive a wedge between the two nations and said the swap line was well-received in Argentina.
(Reporting by Kylie Madry; Editing by Natalia Siniawski and Lisa Shumaker)
