China freezes US$6.5 billion swap credit to Argentina

The Chinese swap credit granted to Argentina, initiated during the Alberto Fernández government and amounting to US$6.5 billion, has been frozen until further notice. These funds could be used for payments to the International Monetary Fund (IMF) or to support imports. It was one of Argentina’s few remaining avenues of external credit open, as reported by “Página 12.”

The swap negotiation included clauses related to political relations. This implies that activating new installments of this loan requires signals of reciprocity from the new Milei government, which has not yet appointed new officials to the embassy in China.

To be triggered, the swap would, in turn, have another clause requiring Argentina to have a programmatic agreement with the IMF, which, with the recent failure to meet targets, is once again in the negotiation process.

In the early days of his government, the ultraliberal economist Javier Milei held meetings with Chinese diplomats who arrived in the country with the delegation that attended his inauguration as president.

Milei reportedly requested the extension of the yuan swap. China did not deny the possibility but expects clarity on the country’s positions in the short, medium, and long term.

Wang Wei, China’s ambassador to Buenos Aires, will travel to Beijing to present a report on possible scenarios for the economic relationship with Argentina while the new president, Javier Milei, is in office. In the Chinese press, Milei is portrayed as a southern version of Donald Trump.

China has not activated the new swap credit, but it does not intend to generate conflicts: no advance payment has been requested for the swap installments already used, nor have the inactive ones been canceled.

China’s financing has been crucial in recent months to pay off debts to the IMF and bolster the reserves of the Central Bank, which were affected by various factors, such as this year’s extraordinary drought in Argentina.

Source: Valor Econômico

Click here to read the original text in Portuguese: https://valor.globo.com/mundo/noticia/2023/12/20/china-congela-crdito-swap-de-us-65-bilhes-argentina.ghtml

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