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The 3 key economic agreements that will strengthen the link between the countries

The 3 key economic agreements that will strengthen the link between the countries

“We want each economy minister with his team to be able to make us a proposal for foreign trade and transactions between the two countries that is done in a common currency, that is built after much debate and meetings,” said Brazilian President Luiz Inácio Lula Da He whistles to journalists after meeting with his colleague Alberto Fernández on Monday.

Meanwhile, Fernández acknowledged that both leaders do not know how a common currency could work, “but we do know how economies work depending on foreign currencies to be able to trade and we know how harmful all of that is.”

“If it were up to me, we would always have foreign trade in the currency of our countries so that we do not have to depend on the dollar.”, added Alberto Fernández at the conference.

Lula also defended the study of the creation of unique currencies for transactions between the Mercosur countries and also the Brics.

Brazilian Finance Minister Fernando Haddad downplayed the idea of ​​a shared single currency between Argentina and Brazil, saying the countries are looking for ways to stimulate bilateral trade, but not to extinguish their own currencies.

Haddad, who raised that possibility in an article last year, said that the removal of trade barriers between the two countries could imply the use of a single currency for trade, given the lack of dollars in Argentina. But that does not mean the end of the Brazilian real, he said.

“Trade is very bad and the problem is precisely the foreign currency, right? So we are trying to find a solution, something in common that can make trade growHaddad told the media upon his arrival in Buenos Aires ahead of Lula’s first international trip since his inauguration on January 1.

2. Dead Cow

“We have talked about strengthening Mercosur, about starting Unasur up again. Also about organizing the energy network. We have talked about the possibility of Vaca Muerta’s production reaching Brazil,” Fernández said during the press conference given by the leaders after the bilateral meeting. In the energy area, it was anticipated that Brazil will provide financing to build a new section of pipeline that will take gas from Vaca Muerta to the border with Río Grande.

The first section between Neuquén and Santa Fe – built by Argentine multinationals – is due to start operating next July and, from there, the second part will continue towards the border with Brazil – with the incorporation of Brazilian steel mills. This route of the pipeline will be financed by the National Bank for Economic and Social Development, which is currently chaired by former Minister Aloysio Mercadante.

In an interview given last December to the journalist Janaina Figueiredo, from the newspaper O Globo, President Fernández expressed his enthusiasm for the project: “With the gas from Vaca Muerta we will be able to balance the trade balance with Brazil”, today unfavorable to the Argentine partner. “We want Brazil to continue as our main trading partner and we are going to look for mechanisms that facilitate this trade.”

The president also affirmed that the BNDES can finance a project that brings Argentine gas from the Vaca Muerta field to Brazil.

3. Guarantee fund

Brazil plans to finance Argentine importers interested in buying its products in an attempt to regain market share lost to China, according to two people familiar with the plan.

The financing of the Argentine companies would be carried out by public and private banks in Brazil and would be covered by loan guarantees from both governments, said the people, who requested anonymity because the discussion is not public. In addition, Argentina would have to provide liquid assets, such as commodity contracts, as collateral before the loans are released, one of the people said.

Brazil lost the position of Argentina’s main trading partner to China in 2019 when the Asian nation implemented the same type of export financing that South American nations are now discussing. In 2022, Brazil ran a US$2.2 billion trade surplus with its southern neighbor.

The amount of financing that Brazil will offer has not yet been defined, one of the people said, and will depend on demand from Argentine companies and their ability to offer guarantees.

Source: Ambito

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