Brazil and Argentina aim for greater economic integration, including the creation of a common currency, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said in a joint article.
“We intend to overcome barriers to our exchange, simplify and modernize regulations and promote the use of local currencies,” said a text published on Argentina’s Perfil website.
“We have also decided to accelerate discussions on a common South American currency that can be used for both financial and commercial flows, reducing transaction costs and our external vulnerability,” the article said.
The idea of a common currency was originally floated in an article written last year by Fernando Haddad and Gabriel Galipolo, now Brazil’s finance minister and his executive secretary, respectively, and Lula mentioned it during the campaign.
Since taking office, Lula has chosen Argentina for his inaugural international trip, following the tradition of visiting Brazil’s biggest trading partner in the region for the first time. It follows four years of strained relations under the government of Brazil’s right-wing former president Jair Bolsonaro.
Lula’s trip to neighboring Argentina also marks Brazil’s return to the Community of Latin American and Caribbean States (CELAC), which Brazil left in 2019. At the behest of Bolsonaro, who refused to participate in the regional group due to the presence of Cuba and Venezuela. .
Both presidents emphasized the need for good relations between Argentina and Brazil to strengthen regional integration, the article said.
The leaders also emphasized strengthening the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay and Uruguay, and which Brazilian Finance Minister Haddad recently lamented has been abandoned in recent years.
“Together with our partners, we want Mercosur to form a platform for our effective integration into the world, jointly negotiating balanced trade agreements that meet our strategic development goals,” said the two presidents.
Earlier, the Financial Times reported that the neighboring countries will announce this week that they are starting preparations for a single currency.
The plan, to be discussed at a summit in Buenos Aires this week, will focus on how the new currency, which Brazil is proposing to call the sur (south), could boost regional trade and reduce dependence on the US dollar, the FT reported, citing officials. .
Politicians from both countries discussed the idea as early as 2019, but at the time faced opposition from Brazil’s central bank.
Initially launched as a bilateral project, the initiative will later be expanded to invite other Latin American countries, the report said, adding that an official announcement is expected during Lula’s visit to Argentina, which begins Sunday evening.
Report by Lisandra Paraguassu; Additional reporting from Bengaluru by Jyoti Narayan; Edited by Tomasz Janowski, Diane Craft and Chris Reese
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