A mission of the economic team headed by the minister Sergio Massa will meet starting today in Brazil with officials and businessmen from that country to try to boost bilateral trade, within the framework of the president’s official visit Alberto Fernandez. Argentine officials will begin by outlining a negotiation to boost bilateral trade that will exclude the dollara difficult issue for Argentina and one that Brazil is willing to agree to.
The Brazilian Vice Minister of Economy, Gabriel GallipoloHe anticipated that Brazil will propose to Argentina the creation of a special line of financing for Brazilian companies that sell to Argentina in local currencies and thus maintain the flow of bilateral trade between the two main Mercosur partners.
Argentina-Brazil trade relationship
“In the last five years, due to Brazil’s lack of mechanisms to finance Brazilian exports and Argentine imports, we have lost approximately US$6 billion of space in the trade balance with Argentina to China, which has been providing mechanisms financing in alternative means of payment, such as swap, or giving credit to the exporter,” the official told the GloboNews news network.
Beyond the financing lines, the agreement that Argentina and Brazil intend to sign includes excluding the dollar as the foreign trade payment currency, a mechanism similar to the swaps with China. Argentine importing companies will be able to pay for their purchases in pesos and the Brazilian Government will convert them into reais.
This will alleviate the requirement for reserves, at a time when the central bank Argentina finds itself almost without foreign currency for immediate use.
In the last few hours, the Ministry of Economy and the Planalto Palace negotiations intensified in Brazil, prior to the trip of Sergio Massa and a group of officials to that country.
The new scheme plans to leave in parentheses the use of North American currency to buy inputs from Brazil, through a financing mechanism from the Brazilian banking system to export companies that work with Argentine clients.
As detailed by the Vice Minister of Finance of Brazil, around 210 Brazilian companies They trade with Argentina, whom the neighboring country’s authorities consider “an important trading partner, mainly in industrial products, which have higher added value.”
“The problem that exists is the convertibility of the currency. You are going to sell in pesos in Argentina, and when you have to pay that loan here, what will happen is that you have a convertibility problem. Will the volume of pesos obtained from the sale be enough, when converted to real, to pay off the debt? All the complexity of the structure is how I manage to solve the problem of convertibility in a trade that today is carried out with a currency of a third country that does not participate in that trade,” said Galípolo, referring to the US dollar.
Source: Ambito
