( Spanish) — The president of Brazil, Luis Inácio Lula Da Silva, promised this Tuesday to help Argentina and intercede with the International Monetary Fund (IMF) on the issue of foreign debt. He said it during a visit by his Argentine counterpart, Alberto Fernández, to Brasilia.
Lula said that he promised with Fernández to make “everything and any sacrifice” to help Argentina in the difficult moment that country is going through due to liquidity problems, high inflation and the foreign debt it has with the IMF.
“I intend to talk, through my finance minister, with the IMF to remove the knife from Argentina’s neck,” Lula said in statements at the end of his meeting with Fernández.
“The IMF knows how Argentina got into debt, it knows who it lent money to, therefore it cannot continue to pressure a country that only wants to grow, create jobs and improve people’s lives,” Lula added this Tuesday.
Fernández thanked Lula for his commitment and said that Brazil’s help is crucial for the country.
“President Lula’s determined support is very important for us,” Fernández said in Brasilia, adding that “the commitment that President Lula has just made explicit to all of you is very important support for us and now what we have to do is find the points of agreement and thus do the work that we have to do with each other”.
Brazil’s President Luiz Inacio Lula da Silva speaks during a meeting with Argentina’s President Alberto Fernández (not pictured) at the Alvorada Palace in Brasilia on May 2, 2023. (Credit: SERGIO LIMA/AFP via Getty Images)
The government of Argentina and the IMF closed an agreement in 2022 to refinance the debt of approximately US$ 45,000 million that the agency granted in 2018 to the then government of Mauricio Macri.
But, due to the growing doubts of investors about the complex macroeconomic conditions in Argentina, the Argentine government had to take various measures in recent months, such as new rules to reduce the operations of bonds in pesos with settlement in dollars in order to “decompress pressures on alternative exchange markets”, at a time when the dollar reserves of the Argentine Central Bank are being drastically reduced, reported Reuters.
In April of this year, the IMF concluded a review of the agreement with Argentina to immediately disburse US$ 5.4 billion, according to a statement, which places the total disbursements at US$44 billion.
“Achieving the primary fiscal deficit target of 1.9% of GDP by 2023 remains essential to support disinflation and reserve accumulation, ease financial pressures, and strengthen debt sustainability,” said the IMF.
Brazilian President Luiz Inacio Lula da Silva (R) and Argentine President Alberto Fernández shake hands at the Alvorada Palace in Brasilia on May 2, 2023. (Photo by Sergio Lima / AFP)
The commercial relationship between Argentina and Brazil
Argentina is Brazil’s third largest trading partner, after China and the United States, according to a Reuters report, adding that Brasilia is working on an action plan to ensure that Brazilian exporters receive payment for their sales to Argentina, which is facing a serious economic crisis and shortage of dollars.
Lula said that it is necessary for Brazil to support Brazilian businessmen who export to Argentina and finance their exports, just as China does with its producers.
“We are discussing a way for our exporters to continue selling to Argentina,” Lula tweeted on Tuesday.
According to Brazil’s Finance Minister Fernando Haddad, more than 200 Brazilian companies have stopped exporting to Argentina or are not receiving payments due to a lack of foreign currency, Reuters reported.
In the first two months of 2023, exports from Argentina to Brazil reached a value of US$10,155 million, while imports from Brazil to Argentina reached US$10,416 million, resulting in a deficit trade balance of US$261 million. , according to information from the Argentine Foreign Ministry.
— With information from Reuters.
