Argentina and Brazil will discuss a common currency during Lula's visit to Buenos Aires

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MULTIMEDIA SPECIAL | Europe and America, two opposite (ideological) poles

Argentina and Brazil will discuss a common currency during Lula's visit to Buenos Aires

< p>Argentina and Brazil plan to advance in discussions on a common currencySouth America during the visit of the Brazilian president, Luiz Inácio Lula da Silva, to Buenos Aires, as confirmed by the Argentine government, although officials and analysts have not they expect it to be implemented in the short term.

“We decided to advance discussions on a common South American currency that can be used for both financial flows as commercial, reducing operating costs and reducing our external vulnerability”, indicates a statement from the Government of Argentine President Alberto Fernández, on the occasion of the visit of > Lula da Silva.

“We intend to overcome the barriers to our exchanges, simplify and modernize the rules, and encourage the use of local currencies,” he adds as one of the Agreements were reached to relaunch the strategic alliancebetween the two countries.

The plan -which will be discussed in the future. Lula's visit, who meets with Fernández on Monday to sign a series of agreements on different topics, includes the possibility of the common currency being extended to other countries. countries, according to official sources. “There will be a decision to start studying the necessary parameters for a common currency , which includes everything from fiscal issues to the size of the economy and the role of central banks,” Argentina's Minister of Economy, Sergio Massa, told the 'Financial Times' newspaper. .

According to the minister, “it would be a study of commercial integration mechanisms”, although he pointed out that he did not want to “create false expectations” because “It is the first step of a long road that Latin America must travel“.

Long term

“None of what he says are short-term measures,” the director of the Abeceb consultancy firm and Minister of Production during the mandate of Mauricio Macri told EFE (2015-2019), Dante Sica.

Sica remembered his that during that mandate progress had been made on a letter of intent between the two countries to begin studying the possibility of having a common currency through a program with the Inter-American Development Bank, and that it was the Brazilian central bank that stopped the move. the initiative.

According to Sica, “the resistance of the central bank of Brazil is strong” because Argentina has an inflation of 94.8% in 2022 and the private ones project 98.4% in 2023, according to the expectations of the Bank. Central Argentina, and “does not have a consistent program to lower inflation in the long term.” “The currency as a whole is built with a high level of confidence, established macroeconomic policies, and similar inflation ranges,” added Mr. Sica, since in Brazil an inflation of 4.8% is projected in 2023.

Brazil is the main trading partner of >Argentina, which closed According to Abeceb, the commercial relationship with the neighboring country will have a deficit of 2,250 million dollars in 2022, although less than the average of 3,500 million dollars registered between 2004 and 2018.

The return of Lula da Silva to power -after his predecessor, the far-right Jair Bolsonaro (2019-2022), had a bad relationship ;n with the Fernández government- has raised expectations of deepening the bilateral relationship between Argentina and Brazil, but economists they highlight the power of Brazilian institutions.