The Bank of China joined a USD 3,000 million repo operation that enabled the Argentine government to cover January debt maturities. This involvement highlights financial dependence on China, despite President Javier Milei's promises to align with the United States and reduce Chinese influence. The deal included Western banks and raises concerns over future risks in 2026.
Economy Minister Luis Caputo executed a USD 3,000 million repo to fully cover Friday's January 9 maturities, totaling USD 4,000 million, of which USD 3,000 million is capital. Among the six participating banks, the Bank of China contributed USD 100 million, while entities like Santander, BBVA, and Deutsche Bank injected around USD 680 million each, followed by Goldman Sachs and JPMorgan.
This operation gains political significance amid Argentina's geopolitical alignment with Donald Trump. The U.S. Treasury Secretary, Scott Bessent, promised to 'remove China from Argentina,' and the White House granted a USD 20,000 million credit line. Yet, China's presence in the repo reveals ongoing dependence, particularly facing USD 20,000 million commitments in 2026, equivalent to 3.6% of GDP, according to Portfolio Personal de Inversiones.
Experts like Santiago López Alfaro from Delphos Investment noted: 'No country in the world pays capital maturities... The problem is that Argentina has a record.' Meanwhile, Fernando Morra from Lambda saw it as 'a quite bad signal to the market regarding the fulfillment of the economic plan,' adding: 'Basically, you're arriving... without being able to reopen markets and without sufficient reserves'.
The International Monetary Fund emphasizes the need to renew the currency swap with the People's Bank of China, which refinanced USD 5,000 million for 12 months until June 2026. Additionally, there are payment arrears on infrastructure projects, such as the Néstor Kirchner and Jorge Cepernic dams in Santa Cruz, financed by over USD 10,600 million from China. A default could trigger a 'cross-default,' impacting other credit lines.
