Brazil and Argentina postponed the signing of a US$ 1.8 billion swap agreement that was supposed to promote bilateral trade amid the global financial crisis. Reasons for the delay were not revealed but the event was rescheduled for August 3.
The agreement was to be signed during the Mercosur two-day presidential summit in Paraguay.
Brazilian officers suggested delaying the signing since Argentina's new Economy Minister Amado Boudou took office only a few days ago. Boudou had a bad start at the summit: he arrived late to the ministerial meeting in Asuncion and contrary to all his peers was unable to come up with estimates of the Argentine performance for the rest of the year.
In Buenos Aires press reports indicated that it was necessary "to recalculate the swap involved to avoid confusion." The agreement at Central banks' level included the exchange of credit lines up to 3.5 billion Brazilian Reais or its equivalent of 6.5 billion Argentine pesos, in the range of US$ 1.8 billion.
The agreement would have an initial trial period of six months and future amendments would be determined by presidents of both central banks. Argentina's foreign exchange reserves stand at US$ 46 billion and Brazil's US$ 208 billion.
Brazil is Argentina's main trade partner. Both countries have seen the volume of foreign trade drop as a consequence of the global crisis and are interested in using local currencies to further stimulate bilateral trade.
However in spite of the "strategic alliance" between the two leading economies of South America and senior members of Mercosur, Brazil has threatened to take Argentina to the WTO for imposing non tariff barriers to trade. In an effort to overcome the situation both countries have encouraged private sector negotiations to find a way out to the dispute.