Brazil will finance exports to Argentina, but asks for guarantees

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Brazil and Argentina will create this Monday (23) a working group to assess the viability of a “South American unit of account”, the agency learned. CNN .

The mechanism, which had been called common currency, was renamed to avoid confusion.

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The announcement should be made today during President Luiz Inácio Lula da Silva’s trip to Buenos Aires. He meets with Argentine President Alberto Fernandez.

The proposal is more similar, for the time being, to financing the export of Brazilian products to Argentina and vice versa.

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The objective is that bilateral exchanges can be carried out without using the dollar, since Argentina’s international reserves are only US$ 7 billion.

Banks – public and private – would finance Argentine companies that want to buy Brazilian products backed by the Brazilian Treasury. On the other hand, Brazil asks Argentina to guarantee the receivables from export contracts, for example, natural gas. Argentines are important gas exporters.

This mechanism has already been successfully used in Brazil in the case of Angola, an important oil exporter, and also unsuccessfully, such as Cuba, which provided cigars as collateral. Operations would be evaluated on a case-by-case basis.

Source: CNN Brasil

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