The second chapter of the rapprochement started between Argentina and Brazil will open next week. A mission from the Ministry of Economy will land in the neighboring country to seek funding from the imports Argentines as well as the second phase of the Néstor Kirchner gas pipeline, which will allow the government to strengthen relations with the main trading partner and alleviate a foreign exchange shortage scenario.
as far as he could tell clarion, Sergio Massa will send a technical team in the second week of February to resume talks with colleagues from Planalto, after Lula’s tour in Buenos Aires last week. His first international trip resulted in a broad understanding, the economic chapter of which also includes the intention to create a long-term South American circulation currency, an initiative that continues to generate discussions on both sides. And what was it Called a “terrible” idea by Nobel laureate Paul Krugman.
With this debate and the drought in the background, the government tries to decompress the financing problems generated by the exchange restrictions and make it difficult to access the dollars to buy inputs, machinery and goods of Brazilian origin. While Brazil try to make up for the space lost to China’s advancewhich improved its position with the swap and the possibility to finance bilateral trade through its own banks (ICBC).
The mechanism being worked on is the extension to 366 days of a credit line of Banco Nación with Banco do Brasil through a system of guarantees. The neighboring country’s entity finances Brazilian companies in real to export to Argentina and Banco Nación supports local companies that carry out imports, without having to have dollars in the operations.
In this way the importer will assume a commitment in reais in the future. During his visit to the country, the Brazilian Finance Minister, Fernando Haddad, assured that a “sovereign wealth fund” will guarantee the letters of credit issued by the Banco do Brasil to finance their exporters. But it is not yet clear what support Argentina will offer and how any exchange rate risk will be offset, given the current weakness of the peso against the real.
“If implemented, it would be equivalent to aa tailored suit to make up for the shortage of foreign currency in Argentina. That is, it would be used, as currently, almost exclusively to import from Brazil and not to export. This is given that Brazil has no external restrictions and Argentine exporters will always prefer to receive dollars rather than pesos, especially if they have to give a financing term,” said an Abeceb report.
With an estimated assets of approx $8.4 billion, Today, Brazil has the Export Guarantee Fund (FGE) to insure Brazilian exports against risks. Today it is under the orbit of the Treasury and is managed by the state bank BNDES, an organization with which Lula seeks to strengthen himself in the region and refinance projects abroad, such as the Néstor Kirchner gas pipeline.
Massa announced that the BNDES will facilitate US$820 million for the purchase of pipelines built in Brazil for the second section, which connects Vaca Muerta with San Jerónimo, in Santa Fe. And the idea is that in the future it will supply gas to the neighboring country. In the immediate future, it will first of all be necessary to dispel the fear that has arisen in some sectors of Brasilia of financing works abroad that end up in cases of corruption such as that of Odebrecht.
Source: Clarin
