Car makers in Argentina have enough dollars to meet production and sales targets, the government said following reports that General Motors had suspended exports from neighbouring Brazil due to a hard currency shortage.
Brazilian newspaper Valor reported last week GM’s South American president, Jaime Ardila, indicated that that trade flows would normalise once Argentina resolved its sovereign debt crisis.
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The country has tightened controls on imports since it defaulted on its debt in July and is restricting the amount of dollars available to importers to protect its foreign reserves.
While government sources acknowledged to the media that there may be a shortage of dollars, a commitment was made, at a meeting last Friday carmaker executives, guaranteeing automakers US$100m a month to import car parts.
A GM do Brasil spokesman told Reuters Ardila’s comments were “related to the need to prioritise the importation of components for production over importation of vehicles, at a time when Argentina faces a restriction of dollar availability in the very short term”.
Following July’s debt default, car manufacturers have slowed production in the face of weak domestic and regional demand – and tough trade and currency controls which have tipped Argentina into recession in the first quarter of this year.
The government is increasing state interventions in the economy in a bid to stop the debt default triggering a balance of payments crisis.
Brazil and Argentina are the two main trading partners in the Mercosur customs union. A bilateral agreement establishing how many vehicles and spare parts can be traded duty free was extended for one year in June.
