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

October 22, 2012

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

August 3, 2012

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

July 31, 2012

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

April 20, 2012

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

January 19, 2012

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

December 7, 2011

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

December 5, 2011

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

October 28, 2011

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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Brazil may face capital flight on Europe debt, IMF director says

October 18, 2011

Arnaldo Galvao – Bloomberg, 10/17/2011

IMF Executive Director Paulo Nogueira Batista Jr. Credit: Mercopress

Brazil could experience a flight of capital should the European sovereign-debt crisis worsen, and the country may use interest rates and U.S. dollar reserves to combat contagion, an International Monetary Fund director said.

A worsening of debt problems in Greece and other European countries would first affect Brazil’s financial markets over other parts of the economy and could have consequences on trade, IMF Executive Director Paulo Nogueira Batista Jr. said in an interview in Paris yesterday. He said he doesn’t expect an exacerbation of the crisis.

Group of 20 finance chiefs last weekend urged European leaders to deal “decisively” with the turmoil when they meet for emergency talks on Oct. 23 and to tame the threat of contagion by maximizing the firepower of their 440 billion-euro ($610 billion) bailout fund. Brazilian Finance Minister Guido Mantega said yesterday the country could suffer knock-on effects from Europe’s debt problems and will react accordingly.

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BRICS struggle again to act together

September 26, 2011

Walter Brandimarte – Reuters, 09/25/2011

A group of five leading emerging economies that has banded together to increase their global clout is again struggling to find common ground.

Expectations the so-called BRICS — Brazil, Russia, India, China and South Africa — would come up with a collective plan to offer support to debt-crippled European nations were high as their top finance officials met in Washington this week.

From their conception 10 years ago as an acronym created by a Goldman Sachs economist, the BRICS have gone a long way to become a new political group that held its first summit two years ago in Russia.

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