Lagarde to explain shift in capital curbs as Brazil demands more

Randall Woods – Bloomberg Businessweek, 12/10/2012

International Monetary Fund Managing Director Christine Lagarde will likely outline the lender’s reversal of its decades-old opposition to capital controls on a five-day tour of Latin American this week, even as Brazil says the new position doesn’t go far enough.

In a Dec. 3 report, the IMF said targeted and temporary controls can be effective in preventing asset bubbles and currency rallies. Policy makers in Brazil, the largest economy in the region and the most aggressive in erecting such barriers, said the fund still shows a bias against controls, places too much emphasis on the benefits of capital flows and doesn’t hold rich nations accountable for fueling sudden liquidity surges.

Still, the IMF’s shift can give cover to countries that might consider enacting such controls, said Claudio Loser, a former Western Hemisphere director at the Washington-based fund.

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Brazil boosts gold reserves to the highest in more than 11 years

Nicholas Larkin  - Bloomberg Businessweek, 11/21/2012

Brazil raised its gold reserves for a second month in October to the highest level in more than 11 years as emerging nations from Kazakhstan to Russia boosted holdings by more than 40 metric tons.

Brazil’s holdings expanded 17.2 tons last month to 52.5 tons, the most since January 2001, according to data on the International Monetary Fund’s website. The country’s 1.7-ton purchase in September was the first since December 2008. Kazakhstan’s holdings increased 7.5 tons, Russia added 0.4 ton and Turkey’s reserves rose 17.5 tons, the data show. Germany, the second-biggest holder, after the U.S., cut gold holdings by 4.2 tons, the first reduction since June.

Central banks have been expanding reserves as the metal heads for a 12th straight annual gain and investors hold a record amount in bullion-backed exchange-traded products, data compiled by Bloomberg show. Nations bought 373.9 tons in the first nine months of the year and full-year additions will probably be in the “bottom end” of 450 to 500 tons, the London-based World Gold Council estimates.

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O’Neill Says Brazil Criticism of QE3 No Fix for Economic Woes

Eric Martin and Matthew Malinowski – Bloomberg, 10/21/2012

Jim O’Neill, the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy, has some advice for Latin America’s biggest economy: Stop criticizing Federal Reserve efforts to revive the U.S. and do more to fix your own problems.

Blaming the Fed is “frequently an excuse to distract attention from the contradictions of monetary and fiscal policy in Brazil,” O’Neill, chairman of Goldman Sachs Asset Management, said in a telephone interview from London. The U.S. is the world’s biggest economy, and “if the Fed does something which is going to reduce the scale of the recession or boost the economy, that is really important for every other country, end of story.”

The Fed’s latest stimulus package dominated this month’s International Monetary Fund meetings in Tokyo, with policy makers from the Philippines to China warning that yield-seeking investors will flood emerging markets with capital. Chairman Ben S. Bernanke used the talks to rebut those arguments after Brazilian President Dilma Rousseff at the United Nations last month slammed rich nations for “fraudulent” protectionism.

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IMF Praises Brazil’s Financial System But Warns Of Home-grown Risks

Bernama, 8/3/2012

BRASILIA, Aug 3 (BERNAMA-NNN-MERCOPRESS) — Thanks to sound policies and built-in cushions, Brazil’s financial system weathered the global crisis that began in 2008 remarkably well, but now policymakers need to monitor for signs of home-grown financial trouble, the IMF said in its later report.

Like the rest of the Brazilian economy, the financial system is exposed to the effects of volatile international markets, especially for commodities and capital.

“There is a risk that the financial system may become a victim of its own success at home,” said Dimitri Demekas, an assistant director in the IMF’s Monetary and Capital Markets department and head of the team that conducted the assessment.

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IMF Urges Brazil to Guard Against Bubbles as Interest Rates Fall

Matthew Malinowski – Bloomberg, 7/31/2012

Brazil should boost supervision of its banking system to avoid against credit bubbles that could form as a result of fast credit growth and falling interest rates, the International Monetary Fund said.

Credit that has doubled as a percent of gross domestic product in the last decade has helped spur economic growth but is also showing signs of straining households, the IMF said in a report today about the health of Brazil’s financial system. In prime housing markets like Sao Paulo and Rio de Janeiro, prices have jumped as much as 30 percent annually in recent years, the Washington-based lender said.

“There is a risk that the financial system may become a victim of its own success,” Dimitri Demekas, head of the team that conducted the assessment, said in a statement on the IMF’s website.

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Brazil’s Mantega: IMF funding agreement likely around $400b

Matthew Cowley – Down Jones Newswires/The Wall Street Journal, 04/20/2012

The Group of 20 nations will likely agree later Friday that the International Monetary Fund will get $400 billion in additional funding, although not all countries will detail their commitment, Brazil’s Finance Minister, Guido Mantega, said Friday.

“It’s probable that there will be an agreement of a value of around $400 billion as the new contribution to be made to the Monetary Fund,” Mantega told reporters on the sidelines of the IMF Spring Meetings.

“However, the countries won’t be specifying the values that they will each be contributing, especially the countries of the BRICS,” Mantega said, referring to the grouping of Brazil, Russia, India, China and South Africa.

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Brazil open to giving the IMF aid, but seeks backing on Fund reform

Gerald Jeffris – Dow Jones/NASDAQ, 01/18/2012

Brazil remains open to offering assistance to ailing economies through the International Monetary Fund, though it is seeking a political commitment to reforming the institution as part of the discussions, a government official familiar with the matter told Dow Jones Newswires Wednesday.

The statement comes after the IMF said it was seeking an additional $500 billion to $600 billion in resources to help fight the effects of the European debt crisis. Brazil and other large emerging-market governments such as China have been called upon to kick in resources for the effort.

“Brazil continues with a positive focus, in the sense of assuring that the IMF has the necessary resources,” the official said. “We understand that the format discussed at Cannes should remain in place.”

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Brazil IMF representative: aid to Europe depends on pact in region

Gerald Jeffris  - Dow Jones Newswires/The Wall Street Journal, 12/07/2011

Financial aid for Europe by Brazil and other BRICs group member countries through the International Monetary Fund will depend on the outcome of talks among European leaders at upcoming meetings, Brazil’s representative to the IMF, Paulo Nogueira Batista, said Wednesday.

Speaking in an interview with Brazil’s CBN radio, Batista said that emerging-market countries couldn’t be expected to help resolve the European crisis without agreement on a plan by that region.

“We can’t define anything within the scope of the IMF if we don’t have a clear view of what Europe plans to do,” Batista said. “If Europe itself is avoiding contributing resources for the euro zone, how are we going to ask other countries to do so?”

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Battered Euope looks to Brazil, which has its own problems

Vinod Sreeharsha – McClatchy Newspapers, 12/02/2011

IMF Managing Director Christine Lagarde, right, speaks during a news conference as Brazil's Economic Minister, Guido Mantega, looks on in Brasilia. Photo Credit: AP/Eraldo Peres

The visit by International Monetary Fund head Christine Lagarde to Brazil this week was the latest sign that while Europe’s financial crisis deepens, Brazil remains a rare bright spot in the battered global economy.

Lagarde, who was examining possible Brazilian participation in a financial bailout package for Europe, lauded the country’s economic management and said that “as the balance of economic power shifts, emerging economies are a key part of the solution to the global problems.”

Brazilian officials say that any aid would go through the IMF and in coordination with other emerging economic powers. Carlos Marcio Cozendey, a senior official at the Brazilian Finance Ministry, told McClatchy in a recent interview that Brazil would first like to see Europe provide more leadership because it “is still a rich continent.”

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Brazil could help euro zone through IMF

Reuters, 10/28/2011

Brazil’s government could help euro zone nations mired in a debt crisis but would likely limit its aid to a bilateral agreement with the International Monetary Fund, a local newspaper reported on Friday.

Latin America’s largest economy does not intend to directly help boost the European Financial Stability Facility to 1 trillion euros, newspaper Valor Economico reported on Friday, without citing a source.

The government of President Dilma Rousseff is waiting for more details of the European agreement to make a decision, Valor added. Brazil would only use a slice of its international reserves if the euro zone plan is solid and effective, Valor said.

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