Lula will discuss economic measures to help Argentina in a meeting with Fernández – 05/01/2023 – Market

President Luiz Inácio Lula da Silva (PT) will meet this Tuesday (2) in Brasília with the president of Argentina, Alberto Fernández, to discuss the economic crisis in the neighboring country.

The expectation of the Brazilian government is that the conversation will serve to advance in the negotiation of economic measures to expand trade partnerships between the two nations.

One of the actions being discussed by the economic teams in each country is the creation of incentives for Brazilian companies that export to Argentina.

“We have been discussing for some time now what we call export credit. It is financing for Brazilian companies that sell to Argentina and it is these companies that import services and goods from Brazil”, said the executive secretary of the Ministry of Finance , Gabriel Galípolo, in an interview with Globonews.

According to him, the economic department is studying how to make this export credit viable given the restrictions that currently exist in Argentina’s balance of payments.

According to Galípolo, Brazil has 210 companies that trade with Argentina, mainly industrial products, which have greater added value.

“In the last five years, due to the absence of mechanisms in Brazil to finance Brazilian exports and Argentine imports, we lost approximately US$ 6 billion of space in the trade balance”, stated number 2 of the Treasury.

“These export lines are financing that pay directly to Brazilian companies. The risk and complexity of the situation is less a traditional financing risk, which is when you finance a company and you don’t know if the company will be able to sell or not, because the demand for the products exists,” he added.

According to Galípolo, the main problem is currency convertibility. “He’s going to sell in pesos in Argentina. When he has to pay off this financing on this side, what’s going to happen is that there’s a convertibility problem. Will the volume of pesos that was earned with the sale, when converted to real, Will it be enough to pay off the debt?”

“The whole complexity of the structure is how I manage to solve the problem of convertibility in a trade that is carried out today by a currency of a third country not participating in that trade”, he continued.

The meeting between Lula and Fernández should take place at 5 pm at the Alvorada Palace, followed by dinner. The meeting will take place less than two weeks after the president of Argentina announced that he will not run for re-election in this year’s election in the neighboring country. One of the possible candidates is the Argentine ambassador to Brazil, Daniel Scioli.

Fernández’s reappointment at the head of the Casa Rosada was considered unlikely due to the low levels of popularity registered due to the serious economic crisis and the increase in poverty that mark his government. Fernández is disapproved of by 71% of Argentines, the highest rejection in the 17-year historical series of the consultancy Poliarquía, which released the number on April 20.

Fernández is one of Lula’s main allies internationally. The Chief Executive’s first trip in his third term was even to Argentina.

The president of Argentina will also return to Brazil at the end of May for an informal meeting that Lula is organizing to discuss integration in South America with other heads of state in the region.