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Wednesday, June 29, 2022

Argentina could join the BRICS and access more financing this year

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The intention is not new. As this medium learned, A few months ago, a working group focused on the strategy for Argentina’s entry into the BRICS was formed.. This is a task coordinated by the Executive Branch with the participation of ambassadors Eduardo Zuain (Russia), Hugo Gobi (India), Claudio Pérez Paladino (South Africa) and Sabino Vaca Narvaja (China). Previously, it also had the presence of the former ambassador to Brazil and current Minister of Productive Development, Daniel Scioli.

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In the Government they consider that the group temporarily commanded by Chinese President Xi Jinping has been playing a central role when it comes to discussing the international financial architecture. With the increasingly marked need to obtain new financing channels, there are two current tools that Argentine diplomacy looks at with interest: the BRICS Development Bank (BND) and the Continence Reserves Agreement (ARC).

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The BND is key when it comes to propping up the deficits in infrastructure and sustainable development that emerging countries have. Its projected program for the 2022-2026 cycle includes financial assistance for US$30,000 million. With difficulties in accumulating reserves and delays in the disbursements foreseen by multilateral organizations, it appears to be an attractive route for Argentina.

On the other hand, swap they also appear to be one of the options chosen by the economic team to bolster Central Bank holdings. Months ago it was confirmed that China will review the current agreement to expand it. In the same line, the ARC, which was born to strengthen the global financial safety net, could contribute its share. This agreement currently has exchanges that reach US $ 100,000 million focused on facing a possible liquidity crisis and containing the volatility of the markets in the face of the withdrawal of monetary stimuli.

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Diplomatic sources confirmed to Ámbito that “China will accompany Argentina’s intention to join the BRICS”. Along these lines, they explained that the accession process could take place in an accelerated manner and be concluded next year since there are previous negotiations and Brazil, another key partner, will also support the motion. Access to lines of credit could be given even this year.

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Source: Ambito

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