Brazil and Argentina work in common currency, says Lula – 01/23/2023 – Market

President Luiz Inácio Lula da Silva (PT) stated that the common currency project between Brazil and Argentina is being worked on by both countries. The statement was given after a meeting between Lula and the Argentine president, Alberto Fernández, in Buenos Aires this Monday (23).

“I think with time it [moeda comum] it will happen, and it needs to happen”, stated Lula.

The Brazilian president says that the common currency project will be dealt with together with proposals for foreign trade and transactions made by the economic teams of Argentina and Brazil, after “many debates and meetings”.

“If it were up to me, we would always have foreign trade in other countries’ currencies, so that we don’t have to depend on the dollar. Why not try to create a common currency between the two countries, with Brics countries?”, said Lula .

The governments of Brazil and Argentina will also sign an agreement to finance Brazilian exports in operations with guarantees from the neighboring country with international liquidity, to try to rekindle trade between the two countries, a source in the Brazilian government who participated in the negotiations told Reuters. .

The agreement foresees the opening of credit from Brazilian banks to Argentine importers and the creation of a fund by the Brazilian government to guarantee the payment of loans.

In this operation, according to the source, the bank pays directly to the Brazilian exporter, with a guarantee from the National Treasury, while Brazil receives from Argentina the same amount, deposited in New York, of bonds with international liquidity.

“It could be Chinese bonds, it could be contracts for the purchase of gas, wheat. Something with international liquidity that guarantees that, in the event of non-payment by the Argentine importer, Brazil can access it to compensate for this non-payment”, said the source.

The entire operation, according to the source, would be done in reais.

The agreement also provides for the guarantee that Brazilian companies will be able to withdraw funds from Argentina without difficulties. With no foreign currency, the country has controlled the outflow of resources from foreign companies, which should no longer happen with Brazilian ones.

The agreement also provides for the organization of a working group to create, in the medium and long term, a single clearing account in South America along the same lines as the one negotiated now with Argentina, but more systematized and with a governance that authorizes the country’s access to resources if it meets certain rules, such as single-digit inflation and not being in default.

Brazil is proud to finance projects in Latin America, says Lula

With regard to the possibility that the BNDES (National Bank for Economic and Social Development) will once again finance works in other Latin American countries, Lula stated that this would be “a source of pride” and that Brazil has a duty to help its neighbors .

He also said that if Brazilian businessmen show effort, the conditions for the creation of a gas pipeline between Brazil and Argentina could be created.

“I am sure that Brazilian businessmen are interested in the gas pipeline, in the fertilizers that Argentina has, in Argentina’s scientific and technological knowledge. And if there is interest from businessmen and the government, and we have a development bank for that, we will create the conditions to make the financing that we can do to help in the Argentine gas pipeline”, said Lula.

(With Reuters)