BUENOS AIRES (Reuters) -Argentina and China have renewed the activated part of a major currency swap line for the equivalent of $5 billion through July 2026, Argentina's central bank said on Wednesday, defusing fears it may have to make major repayments over the coming month.
The South American country's central bank said in a statement it would renew the active tranche of a larger and long-standing $18 billion swap line, for a 12-month period, and then gradually ramp it down to zero by the middle of 2026.
The embattled country had faced the prospect of billions of dollars worth of repayments on the swap this month and next if it did not agree an extension with China, a potential headache for libertarian President Javier Milei with reserves depleted.
The swap line's extension would allow the Argentine central bank (BCRA) to manage payment flows "at critical times for the domestic economy," the bank said in the statement.
"It reinforces the commitment assumed by the current management of the BCRA to overcome the external payment crisis, fully respecting the contractual commitments previously agreed with all its counterparts," it added.
A currency swap line is a loan agreement between central banks that gives the receiving country access to an agreed amount of funds in foreign currency such as dollars, Chinese yuan or euros.
Argentina also has a $44 billion program with the International Monetary Fund (IMF), which includes economic targets on growth, inflation and reserves. The government has said it will open talks with the IMF over a new program.