ASUNCION, Aug. 15 (Xinhua) -- Chile is to develop cooperation with Paraguay, said Chilean president Michelle Bachelet Friday after attending the inauguration ceremony of Paraguayan President Fernando Lugo.

    "We will work and define a cooperation agenda linked to the challenges that the President (Lugo) has said," Bachelet said.

    "The modernization of the State is one of those tasks and another is to support the production development," said Bachelet after Lugo made his inaugural address.

    Chile is the main importer of Paraguay's meat. Trade between the two countries has been brisk and is expected to increase, according to Bachelet.

    Bachelet said she shared with Lugo "the same dreams for Latin America," and will meet the new president at the presidential residence of Mburuvicha before leaving the country.

    Bachelet will travel to Dominican Republic Friday to attend President Leonel Fernandez's inauguration ceremony for the third term schedueled for Sunday.