2023-05-02 00:50:00
The Minister of Economy, Sergio Massatravels to Brazil this Tuesday to advance more trade agreements with the neighboring country and it was recently learned that it includes exclude the dollar as a payment currency of foreign trade.
In the last few hours, the Ministry of Economy and the Planalto Palace Negotiations intensified, prior to the trip of the head of the Palacio de Hacienda and a group of officials. This Monday, the executive secretary of the Brazilian Ministry of Finance, Gabriel Gallipolo, confirmed the new scheme that is expected to leave in brackets the use of North American currency to buy inputs from Brazil.
“We’ve been discussing for some time. what we call export credit. In fact, it is financing for Brazilian companies that sell to Argentina, and it is these companies that import services and goods from Brazil,” Galípolo explained.
All the details of “Sur”, the common currency between Argentina and Brazil
“In the last five years, due to the absence of mechanisms in Brazil to finance Brazilian exports and Argentine imports, we lost approximately US$ 6,000 million of space in the trade balance with Argentina to China, which has been making financing mechanisms possible in alternative means of payment,” added the official.
Thus, Argentine importing companies will be able pay your purchases in pesos and the Government of Brazil will convert them to real. This is expected to ease the reserve requirement, at a time when the Banco Central Argentina finds itself almost without foreign currency for immediate use.
In this sense, Galípolo considered it “important” that these export lines are financing that pay directly to Brazilian companies. “The risk and complexity of the situation is always lower than traditional financial riskwhen you finance a company and you don’t know if the company will be able to sell or not, because the demand for its products exists,” he said.
The official’s clarification has to do with the fact that one of the doubts that arose in the Brazilian private sector when it became known regarding the negotiation of this financing scheme was related to the risk that it might imply for the lender and for the borrower, the Argentine economic and financial fragility.
As detailed by the Vice Minister of Finance, around 210 Brazilian companies trade with Argentinawhom the authorities of the neighboring country consider “an important trading partner, mainly in industrial products, which have higher added value.”
“The problem that exists is the currency convertibility. 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 sufficient, when converted to real, to pay the debt? All the complexity of the structure is how I manage to solve the problem of convertibility in a trade that is carried out today with a currency of a third country that does not participate in that trade,” Galípolo said, referring to the US dollar.
Negotiations between Argentina and Brazil
In addition to Minister Massa and Galípolo, the trade negotiations are carried out together with the head of advisers of the Ministry of Economy, Leonardo MadcurVice President of the Central Bank, Lysander Cleri the Brazilian Finance Minister, fernando haddad and the vice president of that country, Geraldo Alckmin.
One of the central objectives of the visit will be to implement the mechanism to reduce the outflow of dollars from Argentina. Although this measure had been agreed at the end of January during the first visit of the president Lula da Silva to Argentina, it might not be launched between February and March, as planned.
FP / ED
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