Brazilian exporters are increasingly resorting to documentary credit terms to secure payment for goods sold to Argentinian customers. This does not, however, signal healthier trade flows between the two countries.

The parlous state of Argentina's economy is the reason why Brazilian exporters are insisting on documentary credit terms, according to a report in the Brazilian journal, Valor Economico. It says that other exporters have tightened up credit management procedures by lowering credit limits or insisting on cash in advance from Argentinian customers.

Controversial austerity measures approved

Argentina is now in a fourth year of recession. In late July the government won congressional approval to implement an austerity plan aimed at restoring investor confidence in the economy and spark an economic upturn.

Investors will not, however, have been encouraged by the mass street demonstrations that erupted as a result of the approval of austerity plans, which controversially feature spending cuts in public workers' salaries and pensions.

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