Amid Argentina’s ongoing financial and economic crisis, Brazilian President Luiz Inacio Lula da Silva has pledged to act as a link between Argentina and the BRICS bloc. The BRICS bloc is made up of Brazil, Russia, India, China, and South Africa. Lula’s commitment is to facilitate economic assistance to help Argentina in its current crisis. In a 4-hour meeting held in Brazil, Lula made the promise to his Argentine counterpart Alberto Fernandez.
Lula Criticizes the IMF
Lula criticized the role of the International Monetary Fund (IMF) in the crisis. Argentina is currently facing record numbers of inflation and devaluation. Lula called on the IMF to “take the knife from Argentina’s neck.” He stated that the IMF knows how Argentina got into debt and who lent the money. Therefore, it is unfair to put pressure on a country that simply wants to grow, create jobs, and improve people’s lives.
Direct Credit Line and Rule Modification
During the meeting, Lula contacted Dilma Rouseff, the current President of the New Development Bank, to modify a rule. Lula requested that the institution be allowed to offer direct aid to a state outside of the BRICS bloc. Rouseff, who was riding her bike in China at the time, agreed to propose the removal of the article. Additionally, Brazil and Argentina are discussing the possibility of establishing a direct credit line. This credit line would allow Brazilian exports to be collected in reals from an intermediary bank. Argentina would then replenish these funds later. This arrangement would enable Brazilian companies to regain their position as significant partners of Argentina, which was previously taken over by China.
Brazilian Exports Losses to China in Argentina
Fernando Haddad, the Brazilian Minister of Finance, estimated that Brazil had lost $6 billion in exports during the last five years against China in Argentina. Therefore, this direct credit line could potentially help Brazilian companies regain their position as significant partners in Argentina.