IMF expects China to reschedule Argentina’s $18b debt repayments

The International Monetary Fund (IMF) expects China to reschedule repayments on a portion of its $18 billion swap line with Argentina.

This critical move frees up cash for Argentina’s President Javier Milei’s deep budget cuts and supports the IMF’s $43 billion fiscal support programme for the country.

Key points:

• Argentina owes People’s Bank of China (PBC) $2.9 billion this month and $1.9 billion in July.
• The agreement includes refinancing or “rolling over” this debt, drawn from the existing China-Argentina swap line.
• This rollover removes a major obstacle for Argentina’s IMF programme, as it demonstrates Argentina’s ability to manage its debt burden.

Specific details on the rollover or potential refinancing haven’t been revealed yet. Sources suggest Argentina might make partial repayments while rolling over the majority.

In 2023, Argentina made history by using Chinese swap funds to partially repay its IMF loan. This move was significant as China’s swap line is the main source of foreign reserves for Argentina’s central bank, which is facing debt issues.

President Milei initially criticised China during his campaign, but has since taken a more pragmatic approach, stating that he will not interfere with the currency swaps.

Attribution: Bloomberg