After Alberto Fernández’s request, Lula showed up again cautious on possible economic aid to Argentina. Government a mission from that country is expected to disembark this week to advance an agreement that facilitates the use of dollars in bilateral trade, but the Brazilian Economy Minister, Fernando Haddad, was esent to the summit of the most powerful countries on the planet (G7).
“Haddad will be in Japan all week for the G7 meetings”, is the information received from Brazil in the official cables. Lula’s decision represents a change of plans after the failed summit in Brasilia, where Fernández assured that he had reached an agreement so that “next week (for this week) the team of minister (Fernando) Haddad with that of (Sergio) Massa meet to see how we can make these things happen.”
The government staged this lightning-fast trip in response to the late-April currency run, which sent the sky near $500 and hastened reserve losses. The president, Massa and Daniel Scioli tried unlock credit for exports from Brazil to Argentina and thus postpone the use of dollars. Lula was willing to intercede with the IMF to help Fernández, but he added an unexpected player on the radar: the BRICS.
The idea of the PT leader is that the new bank of the commercial bloc grant the necessary guarantees to the National Development Bank (BNDES) of Brazil to authorize the financing, in reais, of exports from that country to Argentina. Like this, Lula involved China in negotiating a financial umbrella to cover the risk that Argentine importers will not be able to pay the dollars they owe.
“They are negotiating the BRICS guarantee”, indicated the Ministry of Economy. Sources in the Brazilian embassy, meanwhile, have not commented on the consultation clarion.
In reality, Brazil has its own Export Guarantee Fund (FGE) to insure against risks. Massa underlined that this entity, managed by the BNDES and with assets of around 8.4 billion dollars, finances the Vaca Muerta pipeline. There has also been talk of bilateral trade, but Argentina would not qualify and Lula faces internal criticism for having financed other countries at favorable rates in his first term.
There has been strong criticism of all of this from the Brazilian press regarding this possibility.
In this context, Brazilian exportersThey face increasing difficulties trading with Argentina. To begin with, they have to wait for the approval of 180-day permits, while they note an increase in transactions authorized in yuan due to exchange with China. The Asian giant took the market from Brazil and today it is the second largest exporter to Argentina with an 18% stake.behind the 24% represented by the neighboring country.
On the other hand, companies in Brazil complain about the increase trade debt that Argentine importers maintain with that country and difficulty transferring currency due to exchange restrictions. “If you want to withdraw funds from Argentina, you have a tax rate of 60%, which makes companies start buying real estate in Argentina, it’s almost a real estate agency in Argentina,” a Brazilian official acknowledged to O’Globbo.
Although Fernández had to return last week “without money”, as Lula ironically acknowledged, the Chinese threat is keeping the negotiations open. Argentina represents a key destination for the powerful industrialists of São Paulo. In the first quarter, Brazil exported $4 billion to its main partner Mercosur. “If exports fall, it will hit Brazil’s manufacturing,” said a local businessman.
Source: Clarin
