Mantega Says Using Brazil Wealth Fund to Cover Budget Legitimate

September 24, 2014

Mario Sergio Lima – Bloomberg, 9/23/2014

Brazilian Finance Minister Guido Mantega defended today the use of the country’s sovereign fund to help meet fiscal targets in a year when Latin America’s biggest economy had its debt rating downgraded.

Brazil announced it will withdraw 3.5 billion reais ($1.45 billion) from the sovereign fund to cover spending. The primary surplus, which excludes interest payments, was 1.22 percent of gross domestic product in the year through July, compared with the 1.9 percent target.

“The sovereign fund is a primary savings account we created in 2008 and is perfectly usable,” Mantega told reporters today in Brasilia. “Nothing is more legitimate than using that fund to cover part of expenses.”

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Arminio Fraga offers Brazil an orthodox path

September 19, 2014

Joe Leahy – Financial Times, 9/17/2014

Arminio Fraga’s assessment of what is wrong with Brazil explains why he is the market’s choice to be finance minister after next month’s election.

“There`s a clear feeling the government is lost, it has picked the wrong model,” Mr Fraga says in an interview at his office in Leblon, Rio de Janeiro, almost within hearing distance of the Atlantic waves crashing on to the city’s beaches a block or two away.

Mr Fraga advocates a return to economic orthodoxy. A former managing director with financier George Soros and Brazilian central bank president, who co-founded his own hedge fund Gavea Investimentos before selling it to JPMorgan, Mr Fraga is one of Brazil`s most respected economists. He is seen as the country’s version of Raghuram Rajan, the University of Chicago economist who became India’s central bank governor last year.

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Brazil Finance Minister Seen Stepping Down

September 8, 2014

Paulo Trevisani – The Wall Street Journal, 9/5/2014

No matter who wins Brazil’s October elections, one thing has become clear: the man who oversaw an economic boom turned bust is likely to depart.

Guido Mantega’s eight-year stretch as Brazilian finance minister is seen ending whether frontrunner Marina Silva, the Socialist candidate, beats President Dilma Rousseff, or not.

Ms. Rousseff, in response to polls showing she would lose a potential second-round runoff to Ms. Silva, said this week that if she was re-elected, she would assemble a new team. Her comments were widely seen as a confirmation that Mr. Mantega, one of the longest-serving finance ministers ever, is on his way out.

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Brazil finance chief says economy to pick up after slow start

August 6, 2014

Alonso Soto and Luciana Otoni – Reuters, 8/6/2014

The Brazilian economy should pick up in the second half of the year after a slow start and hit more “reasonable” growth levels in 2015, Finance Minister Guido Mantega told Reuters on Tuesday.

Slowing inflation and an expansion in credit, as well as a recovery in mining and oil output, should help an economy that was dragged down by high interest rates and a string of holidays during the first half of 2014, he said.

“We have a more favourable outlook and see quicker growth in the second half of the year,” Mantega said. “Although 2014 will be a sort of transition year for us and for everyone in the world, we believe that we have the conditions to grow more next year.”

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Brazil pledges $18.5 bn cuts in effort to woo investors

February 21, 2014

Samantha Pearson – The Financial Times, 2/20/2014

Brazil has promised to cut $18.5bn in public spending, as a former star of emerging markets struggles to win back investors’ trust.

After cancelling his trip to the Group of 20 meeting in Australia this weekend, in order to finalise the country’s fiscal policy, Guido Mantega, Brazil’s finance minister, announced a new primary surplus goal of 1.9 per cent on Thursday.

To meet this target, the government will have to slash R$44bn ($18.5bn) from the budget planned for this year, relying heavily on cuts to discretionary spending in Congress.

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Brazil’s Mantega cancels G20 trip to focus on fiscal goals

February 19, 2014

Reuters, 2/18/2014

Brazilian Finance Minister Guido Mantega canceled his trip to the Group of 20 meeting in Australia this week to hammer out the final details of Brazil’s key fiscal goal for the year, a government official told Reuters on Tuesday.

President Dilma Rousseff’s government is expected to announce this week its 2014 primary budget surplus goal, a gauge of its fiscal discipline that is key to efforts to recover credibility in its economic policies.

The primary surplus is the excess revenue before the payment of interest on debt.

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Brazil’s “currency war” era is over, but its problems may be just beginning

August 9, 2013

Tim Fernholz – Quartz, 08/09/2013

It’s a financial lesson in being careful what you wish for.

Brazil’s finance minister Guido Mantega declared the existence of a “currency war” in 2010, as wealthy countries used stimulus money to lower interest rates and escape the global recession, sending yield-seeking investors to emerging markets like Brazil. These capital flows pushed up the Brazilian rial, making the country’s export-driven economy less competitive.

The “currency war” story was always over-rated; global demand was ultimately more important, and emerging markets exporters found various ways to protect their currencies. In February, Mantega said his country had “neutralized” the currency war, stabilizing its currency at roughly 2 reals per dollar. With the US Federal Reserve signaling a willingness to slow the bond-buying program that offended Mantega so much, you might imagine he’s taking a small victory lap.

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