Mercosur: Lula wants a multilateral payment system – 07/03/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) wants to expand the Mercosur system that allows imports and exports in local currencies and make it multilateral. Today, the so-called Local Currency Payment System (SML) works only bilaterally between the bloc’s member countries.

The idea is to integrate the systems of the central banks of Brazil, Argentina, Uruguay and Paraguay, according to the secretary of international affairs at the Ministry of Finance, Tatiana Rosito. She says that this will be one of the government’s priorities in the next six months when the country assumes the Mercosur presidency.

“It is one of the ways to expand macroeconomic convergence”, she told journalists after the meeting of ministers and central banks of the group, in Puerto Iguazú, on the Argentinean border of the Iguazu Falls, this Monday (3). Rosito avoided mentioning deadlines, but said that it is a medium-term objective, part of the long road towards a common currency defended by Lula.

According to the economist, today only 1% to 4% of trade between the four countries is done through this system, which allows payments and receipts to be made directly in reais, without the need for the dollar. According to BC, it facilitates and reduces the cost of operations.

Roseti claims that trade within the bloc is below expectations and has declined in the last decade, while trade with countries outside Mercosur, such as China, has increased, according to a study presented by the responsible committee at the ministerial meeting.

The improvement of the system is a bet for this to be reversed. According to her, however, legal issues in each country have not yet been discussed.