BRASILIA, March 21 (Reuters) - Brazil and Argentina will help set up a private credit line for local businesses to bolster trade that has been hit by a sharp currency depreciation in Argentina, Brazilian Trade Minister Mauro Borges said on Friday.
Both countries will ink a deal on March 27 to safeguard credit flows between the neighbors, helping commercial banks interested in offering loans to local businesses.
“We have been working on structuring this commercial credit line to increase our bilateral trade,” Borges told reporters in Brasilia.
He said the details of the deal are still being worked out, but that Brazil’s state-run development bank BNDES will not participate in the operation.
Brazil scored its smallest trade surplus with Argentina in nearly a decade last year as the neighboring country raised barriers on Brazilian products to protect its balance of payments.
The sharp depreciation of the Argentinian peso, which has slid nearly 19 percent against the US dollar so far this year, has also reduced the supply of dollars for importers, curbing the purchase of Brazilian manufactured goods.
Exports of diesel-powered Brazilian cars to Argentina fell nearly 6 percent in the first two months of this year from the same period in 2013, according to trade ministry data.
Brazilian officials are worried that a drop in exports to Argentina could not only hurt an already weak local industry, but erode the country’s balance of payments. (Reporting by Alonso Soto; Editing by Stephen Powell)