Argentina, Brazil Vow to Find Way to Avoid US Dollar in Trade

Argentina's economy has been hit hard by a run on the peso and a drain of US dollars from central bank reserves, partly due to a drought that has hit exports. There had been high expectations that the two countries would announce a mechanism allowing Argentine firms to continue trading with Brazil without draining precious dollars from the country's reserves. However, after a nearly four-hour meeting, the two presidents made clear they were still working out the details, according to AP.

"The meeting was long, difficult and we will carry out many more meetings," Lula said, adding that he would do "every and any sacrifice" to help Argentina. The proposed plan involves a line of credit to finance Brazilian companies that export to Argentina with the intention of avoiding the use of the dollar, said the finance ministry's executive secretary, Gabriel Galípolo. Finance Minister Fernando Haddad said the two governments were studying possible guarantees for Brazil's government to provide such financing.

"We've made the decision to help make sure that Brazilian companies continue exporting to Argentina, and they had asked us to do some homework, which we have already done, and have to do with the necessary guarantees," Fernández said. He added that Economy Ministry officials would be meeting with their Brazilian counterparts next week to finalize the details.

Brazil is Argentina's largest trade partner and the deal could provide some breathing room for Argentina at a time when it is suffering from a shortage of dollars. Argentina struck a deal with China that allows its companies to pay for Chinese imports with yuan. Lula hailed an agreement between Brazil and China to use the yuan in their bilateral commerce, while also criticizing the dominance of the dollar in international trade and the International Monetary Fund.

"We need to help Brazilians who export to Argentina and finance Brazilian exports, just like China does with Chinese products," Lula said. He also said he was in talks with China to change the regulation of BRICS to assist countries who 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 in debt taken on by the previous government. Fernández said Brazil would also negotiate with the IMF on behalf of Argentina.

Fernández's visit to Brazil comes weeks after he announced he would not seek reelection in the election this October. He was joined in Brasilia by Massa and Argentina's ambassador to Brazil, Daniel Scioli, both of whom are considered possible contenders for the presidency.