• Categories
  • Archives

Brazil and Neighbors Build Their Own US$ 7-Billion Nest Egg

Banco del Sur The definitive agreement for the launching of the Bank of the South, a multilateral organization to help fund development and infrastructure projects, was finally reached Friday, May 8, in Buenos Aires, capital of Argentina. The document was signed by finance ministers from Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela

"We've closed all pending issues and therefore this is the last ministerial meeting on the subject, said Argentine Finance minister Carlos Fernández who nevertheless added that the final stitch is "the technical review of statutes" of the new bank and the "parliamentary approval by the seven founding countries."

The Bank of the South, started at the end of 2007 (and the brainchild of Venezuela's Hugo Chavez), will have an initial capital of 7 billion US dollars (originally it was planned 10 billion), of which Argentina, Brazil and Venezuela will supply 2 billion US dollars each; Ecuador and Uruguay 400 million US dollars each and Bolivia 200 million.

"The terms of the agreement are acceptable, so the statutes should be easily approved without much discussion," said Brazil's Finance minister. Guido Mantega. "This is the missing step for financial integration," he added.

"Given the current international context the bank should be operational as soon as possible," added Argentina's Fernandez. "It's not easy to create a financial institution of this kind in the midst of an international crisis."

According to the statutes, each country member will have "one vote" in the board but for approval of loans over US$ 70 million, support from votes representing two thirds of capital subscription will be needed, explained Fernandez.

At the same meeting Argentina and Brazil also agreed to a US$ 1.5 billion swap to reinforce their international reserves. The operation is similar to that recently agreed between Argentina and China and the one signed by the Federal Reserve and fifteen other countries, including Brazil.

The swap is "preventive" and enables each country access to a credit in Brazilian reais or Argentine Pesos equivalent to US$ 1.5 billion and valid for three years.

Brazilian minister Mantega said that when Brazil signed the agreement with the Fed he advanced that the scheme would be expanded to the region, with Argentina and Uruguay as first interested parties.

"It's a precaution mechanism to reinforce international reserves. Let's hope this becomes available as soon as possible and operational for the two central banks," said Fernandez.

Mercopress

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Changes Rules for Hedge Operations Abroad

Brazil’s National Monetary Council has just announced that as of March 15, all hedge ...

Intolerance in Brazil: The Hard Life of Those Who Believe in African Gods

In the beginning of May, the Report on the Human Right to Education investigative ...

Summit Talk

"We know our responsibilities across the world. We know that the world is uneven, ...

Sugar

Soy, Meat, Sugar and Alcohol Give Brazil Record Exports

Brazilian agribusiness exports reached US$ 4.729 billion in the month of April and grew ...

Brazil Goes to New Zealand to Learn Ecotourism

A Memorandum of Understanding signed between Brazil and New Zealand should lead to cooperation ...

In Brazil Beef Exports Are Up, But Prices Are Down

A study released earlier this month by the Brazilian Confederation of Agriculture (CNA) shows ...

Driven by Hope

It is the Landless Movement belief that the large landed estate (latifúndio) and the ...

US Investigates Shrimp Dumping by Brazil

Investigators from the Department of Commerce of the United States are in Brazil as ...

Street Smart

When Curitiba, a city on the southern state of Paraná, does something the world ...

AIDS drug Kaletra from Abbott

In Showdown with Brazil Over AIDS Drug Patent, Abbott Blinks First

On June 24, Brazil issued an ultimatum to the Illinois-based pharmaceutical corporation Abbott Laboratories ...