Persio Arida, managing partner of Brazil’s largest investment bank and former Wilson Center Public Policy Scholar, reflects on eighteen years of the stabilization plan he helped to conceive and implement and on current challenges facing Brazilian and global economies
Leticia Bragaglia – O Estado de S.Paulo, 06/28/2012
(translated by Lauren Phelps and Elizabeth Sweitzer)
SÃO PAULO – A few days after its 18th anniversary, Plano Real is still not considered a total success by one of its creators, economist Persio Arida. A former Wilson Center Public Policy Scholar, where he wrote a seminal concept paper on economic stabilization in Brazil. Arida is a managing partner and Chairman of the Asset Management of BTG Pactual, Latin America largest independent investment bank. According to him, the Real project will be fully completed only “when Brazilian interest rates are the same as international rates, when Brazilian credit is on par with that of other emerging countries, and when credit is available for long periods of time and in large amounts.” The lower rates of growth Brazilian economy is experienced is not caused by a lack of optimism nor entrepreneurship, he said. “The problem for our country is the excessive tax burden and the great weight of subsidized and directed credit and excessive state intervention.”
Arida believes that maintaining stability is crucial, but criticizes strong government intervention in the economy, even when its purpose is to encourage growth. “From the viewpoint of modernizing and reducing the state’s interference in the economy, the country is regressing, not evolving,” he warns.
This point, he said, is one of the reasons for foreigners’ decreasing interest in Brazil. He is referring to the Financial Operations Tax (IOF) on capital inflows into the country, the tax on imported goods (IPI) for imported cars, and the restrictions on land purchases by foreigners.
The original version of this interview was published online in the June 28 edition of O Estado de S.Paulo. Leticia Bragaglia conducted the interview. Brazil Institute interns Lauren Phelps and Elizabeth Sweitzer translated the text into English.