BRASILIA, Brazil –
Argentine President Alberto Fernández and his Brazilian counterpart Luiz Inácio Lula da Silva vowed on Tuesday to continue working to devise a mechanism that would allow them to prevent the use of the US dollar in trade between neighboring nations.
Argentina’s economy looks particularly fragile after a run on the peso in financial markets led to a sharp devaluation of the local currency late last month, as well as a flight of US dollars from central bank reserves, partly due to to a devastating drought that has reduced exports. .
Expectations were high Tuesday that the two countries would unveil a mechanism that would allow Argentine companies to continue trading with Brazil without depleting precious dollars from the country’s reserves. However, after a nearly four-hour meeting, the two presidents made it clear that the details were still being worked out.
“The meeting was long, difficult and we will hold many more meetings,” Lula said with Fernández as the two leftist presidents spoke to reporters. “I promised my friend Alberto Fernández that I will make any and all sacrifices so that we can help Argentina in this difficult time.”
The proposed plan contemplates a line of credit to finance Brazilian companies that export to Argentina with the intention of avoiding the use of the dollar, said the executive secretary of the finance ministry, Gabriel Galipolo.
On Tuesday morning, Finance Minister Fernando Haddad told reporters that the two governments are studying possible guarantees for the Brazilian government to provide such financing.
“They have made the decision to help Brazilian companies continue exporting to Argentina and they had asked us to do some homework, which we have already done, and they have to do with the necessary guarantees,” said Fernández, adding that Economy officials of the Ministry will meet with their Brazilian counterparts next week to refine the details.
“Now what we have to do is find these points of agreement… to put into operation those credits that guarantee the production of the Brazilian companies that export to Argentina,” said the Argentine president.
Brazil is Argentina’s biggest trading partner and the agreement could give Argentina a breather at a time when it is suffering from dollar shortages.
Argentina reached an agreement with China that allows its companies to pay for Chinese imports with yuan. Lula, for his part, hailed an agreement between Brazil and China to use the yuan in their bilateral trade while in Shanghai last month, while criticizing the dominance of the dollar in international trade and the International Monetary Fund.
“We are not having a discussion to help Argentina,” Lula said. “We need to help Brazilians who export to Argentina and finance Brazilian exports, just like China does with Chinese products.”
Lula also said he was in talks with China to change the regulation of the BRICS, the group of countries made up of Brazil, Russia, India, China and South Africa, to help countries that are not part of the group, including Argentina.
Argentina’s Economy Minister Sergio Massa has said his country is renegotiating aspects of its agreement signed with the IMF in 2022 to restructure some $44 billion of debt taken on by the center-right government of Fernández’s predecessor, Mauricio Macri.
“We are renegotiating the program that we committed to with the IMF…because the conditions have indeed changed,” Fernández said, referring to Russia’s invasion of Ukraine and the drought. Lula said that Brazil would also negotiate with the IMF on behalf of Argentina
Fernández’s visit to Brazil comes weeks after he announced that he will not seek re-election in the October elections. He was accompanied in Brasilia by Massa and the Argentine ambassador to Brazil, Daniel Scioli, both considered potential presidential candidates.
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Politi reported from Buenos Aires.