Sergio Massa Returns From Brazil With Export Deal Still Pending

Brazilian Economy Minister Fernando Haddad had expected to hear a proposal on payments to Brazilian exporters in yuan, but the Argentine official arrived with a different agenda

Photo: Anita Pouchard Serra/Bloomberg
By Martha Viotti Beck - Simone Preissler Iglesias
August 29, 2023 | 10:11 AM

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Bloomberg — A trip by Argentina’s Economy Minister and presidential candidate Sergio Massa to Brasilia ended without agreement on a plan that Brazil had pitched to guarantee its exports to the neighboring country.

Haddad expected to hear from Massa on Monday whether he would agree to use yuan reserves to guarantee payments to Brazilian exporters — a plan designed to keep trading flowing between South America’s two largest economies amid Argentina’s growing dollar shortage. Yet Massa came up with a different proposal that, rather than relying on the nation’s dwindling foreign reserves, involves guarantees offered by CAF, the Caracas-based Development Bank for Latin America.

CAF, Haddad said, is studying the plan and has promised to make a decision by Sept. 14 on whether to authorize guarantees of about $500 million to $600 million. Brazil’s initial offer still stands, he added during a joint news conference at the presidential palace, where Massa met with President Luiz Inacio Lula da Silva.

“For Argentina, it’s better if it’s done through CAF,” Haddad said. “We’re fine either way.”

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Haddad and Massa during a meeting in Buenos Aires on Jan. 23dfd

Uncomfortable Meeting

Earlier, Massa caught Haddad by surprise when he released to the press an “agenda of bilateral topics” that hadn’t been mutually agreed upon, according to two Brazilian officials familiar with the matter. The document listed initiatives that are still under discussion by both countries, including financing by Brazil’s development bank BNDES to a gas pipeline in Argentina.

The strategy made Brazilian officials uncomfortable and Haddad decided to cancel a scheduled meeting with a broader delegation that accompanied Massa, the officials said, asking for anonymity because the matter isn’t public. Argentina’s finance ministry didn’t immediately reply to a request for comment sent outside business hours.

Argentina’s foreign reserves are at crucial levels as President Alberto Fernandez’s administration struggles to support the embattled national currency. The government devalued the official peso exchange rate by 18% right after the ruling coalition led by Massa lost a primary election earlier this month, only to see the gap between rates in the official and the parallel markets widen further.

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The weakening peso translates into faster inflation, which is expected to top 10% this month, further complicating Massa’s presidential campaign.

--With assistance from Manuela Tobias.

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