Argentina expands China currency swap as Beijing eyes Latin America

China has used currency deals, financing for infrastructure projects and other investments to expand its influence in Argentina and across Latin America. (File/AP)
Updated 09 November 2018

Argentina expands China currency swap as Beijing eyes Latin America

  • The agreement is practically done, minus some formal details to finalize the process: Central Bank President Guido Sandleris
  • Argentina and China first agreed to a currency swap program to boost its dwindling reserves in 2009

Argentina’s central bank said on Thursday it would nearly double its currency swap deal with China, bringing the total to 130 billion yuan ($18.7 billion), as Beijing looks to expand its influence in the recession-struck Latin American country.
Central Bank President Guido Sandleris, who was in China finalizing the agreement, said that the deal for 70 billion yuan would be expanded by 60 billion yuan, according to a bank spokesman.
“The agreement is practically done, minus some formal details to finalize the process,” Sandleris said.
Argentina and China first agreed to a currency swap program to boost its dwindling reserves in 2009 under former President Cristina Fernandez. Last year, under President Mauricio Macri, they agreed to extend the program for three more years.
China has used currency deals, financing for infrastructure projects and other investments to expand its influence in Argentina and across Latin America.
“As the US is looking inward, China is continuing to invest in the region. Between currency swaps and tech investments, China is filling the gap in Latin America,” said Nathan Lustig, managing partner at Magma Partners, a Chilean-based startup investment firm.
The swap agreement comes ahead of the high-profile G20 summit of the world’s major economies to be held in Buenos Aires at the end of November, which Argentina will host.
Argentina’s central bank has approximately $54.25 billion in reserves, after the country firmed up a financing agreement with the International Monetary Fund last month.
Argentina turned to external sources of financing after a bad drought and a run on the peso currency earlier this year sparked investor jitters over whether the country could service its international debts in 2019.
Sandleris assumed the role of central bank president in September after his predecessor unexpectedly resigned amid negotiations to expand the IMF agreement to $56.3 billion, the largest in the fund’s history.
Under Sandleris, the peso has stabilized after the central bank initiated a policy to limit growth in the country’s monetary base. The policy aims to control inflation as the country struggles to pull itself out of recession.
“During the first month of our new monetary policy, we met the goal of zero growth in the monetary base, and we will continue to meet that goal in the coming months,” Sandleris said.
Sandleris added that the impact of the policy on inflation would not be immediate.
Argentina’s inflation in 2018 is forecast at 47.5 percent, according to the latest central bank poll.
The peso has lost almost half of its value against the dollar so far this year.


Saudi-led group reinstated as builder of Bulgaria gas pipeline

Updated 16 September 2019

Saudi-led group reinstated as builder of Bulgaria gas pipeline

  • Bulgaria’s Supreme Administrative Court announced that the Saudi-led group’s main competitors for the project had dropped a legal challenge relating to the award
  • Bulgaria’s state gas operator Bulgartransgaz had initially chosen the Saudi-led group — made up of Saudi Arabia’s Arkad Engineering and a joint venture including Switzerland’s ABB

SOFIA: A Saudi-led consortium was definitively reinstated on Monday as the builder of a new gas pipeline through Bulgaria, intended to hook up to Gazprom’s TurkStream project.
Bulgaria’s Supreme Administrative Court announced Monday that the Saudi-led group’s main competitors for the project had dropped a legal challenge relating to the award.
The latest development brings to an end a long-running tussle between the Saudi-led consortium and its competitors for the project, a consortium of Luxembourg-based Completions Development, Italy’s Bonatti and Germany’s Max Streicher.
Bulgaria’s state gas operator Bulgartransgaz had initially chosen the Saudi-led group — made up of Saudi Arabia’s Arkad Engineering and a joint venture including Switzerland’s ABB — to build the 474-kilometer (294-mile) pipeline.
But Bulgartransgaz later decided to strike the winner off the tender for failing to supply documents needed to sign off the contract.
Instead it accepted the offer of the second-placed consortium led by Completions Development.
However, Bulgaria’s competition watchdog ruled in July that the operator should honor its previous commitments and sign a contract with the Saudi-led group.
The watchdog’s verdict was subject to a final appeal in the courts but the Supreme Administrative Court announced Monday that the appeal had been withdrawn, meaning that the Arkad-led group has now been definitively reinstated.
Bulgartransgaz is in a hurry to complete the pipeline as soon as possible in a bid to enable Russian gas giant Gazprom to hook it up to its TurkStream pipeline after it becomes operational at the end of this year.
Bulgaria, which is heavily dependent on Russian gas for its domestic needs, has been repeatedly criticized by both the EU and the United States for failing to diversify both its gas sources and its delivery routes.
The Balkan country hopes to start receiving Caspian Sea gas from Azerbaijan’s Shah Deniz field as well as liquefied natural gas from various sources via terminals in Greece through a 182-kilometer (113-mile) interconnector expected to be ready by the end of 2020.