AFFECTED FLOWOutflow (subsidised)
ANNOUNCED AS TEMPORARYNo
On 28 March 2014, the Brazilian and Argentinian governments signed a memorandum of understanding to finance trade between the two countries. As a result of Argentina's lack of dollars and a depreciating peso, Brazil has been confronted with non-tariff barriers by Argentina which is responsible for 8% of Brazil's exports.
In the memorandum of understanding, both countries agree to consider adopting financial instruments to lower the currency exchange risk for importers in loans of at least 90 days. One option is to issue local-currency denominated debt protected against foreign exchange fluctuations. Argentina, in turn, is willing to eliminate some of its red tape. However, when it comes to details, the memorandum did not decide on how the financial mechanisms are going to be implemented in practice.
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