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

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

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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South America financial stability fund gets backing from Brazil, Argentina

Alexander Ragir, Eliana Raszewski – Bloomberg, 08/12/2011

Finance ministers from across South America are discussing the creation of a fund to provide the region a “safety net” and ward off the effects of the global financial crisis, Brazilian Finance Minister Guido Mantega said.

Officials from the Unasur political bloc are meeting in Buenos Aires today to discuss creating a new stability fund or strengthening an existing mechanism, known as the Fondo Latinoamericano de Reservas, Mantega said. The $4 billion FLAR pools foreign currency reserves from five Andean nations plus Costa Rica and Uruguay to help member nations that run into balance of payment problems.

“Brazil and Argentina are ready to add to FLAR,” Mantega said at a dinner with Argentine Economy Minister Amado Boudou last night. “This could complement the International Monetary Fund. Since it’s already there we can strengthen it and think about creating something more comprehensive.”

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Brazilian capital controls are ‘appropriate’ tool, IMF says

Alexander Ragir – Bloomberg, 08/03/2011

Brazil’s use of capital controls is an “appropriate” tool to manage foreign investment inflows though the government needs to monitor distortions generated by their use, the International Monetary Fund said.

Latin America’s largest economy’s outlook is “favorable” while showing signs of “overheating,” the IMF’s executive board said in a statement today following the conclusion of its periodic review of the country’s finances. The government should consider cutting spending further as a way to slow inflation, reduce the need for higher interest rates and curb inflows.

President Dilma Rousseff’s government has blamed the U.S. for sparking a global “currency war” by keeping interest rates near zero, precipitating a flood of investment into emerging markets that’s causing currencies to rally. Last week, Brazil slapped a 1 percent tax on bets against the U.S. dollar in the futures market after the real reached a 12-year high.

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Lagarde to boost clout of China, Brazil as new IMF chief

Eric Coleman – Bloomberg, 06/29/2011

Bloomberg’s Eric Coleman reports on Christine Lagarde’s priorities as the new head of the International Monetary Fund.

Watch the video here.

Brazil and U.S. back Lagarde for IMF post; chances look dim for Mexico’s Carstens

Andrew OReilly – Latin American News Dispatch, 06/28/2011

Mexico’s central bank chief, Agustín Carstens, put in a good run, but it looks more likely now that France’s Christine Lagarde will be the next managing director of International Monetary Fund (IMF) after receiving the backing of the U.S. and Brazil earlier today.

An unnamed Brazilian government source told Reuters on Tuesday that the country was giving its support to Lagarde. This follows a statement by U.S. Treasury Secretary Timothy Geithner endorsing France’s finance minister.

Geithner praised Carstens for having a “strong and credible candidacy,” but the U.S. endorsement virtually seals a win for Lagarde.

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South Africa asks Brazil to back Manuel for IMF

IOL, 06/03/2011

SA has asked Brazil to support former finance minister Trevor Manuel’s bid for the top job at the International Monetary Fund (IMF), the People’s Daily reported on Friday.

The newspaper, headquartered in the People’s Republic of China, added that President Jacob Zuma had made the appeal during a phone call with his Brazilian counterpart, Dilma Rousseff, citing Brazilian presidential spokesman Rodrigo Baena as a source.

“Zuma, who said he had discussed the issue with other major developing countries, also told Rousseff that he favours the greater participation of developing countries in the IMF.”

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Will the IMF’s words of wisdom fall on deaf Brazilian ears?

Eric Jackson – Global Trader, 05/16/2011

Brazil’s government could be excused for taking more than just a prurient interest in the accusations levelled at Dominique Strauss-Kahn, the head of the International Monetary Fund, in New York.

Prior to the weekend the IMF told Brazil that it was being a very naughty boy. It’s crime? Making too much money from its commodities and enjoying too much growth but not reinvesting the windfalls into infrastructure and failing to control public spending and personal debt.

However at the same time as the rebuke was still ringing in the ears of the Brazilian politicians, who were probably feeling quite satisfied that the country was free of the slump gripping most of the western world, the IMF was being rocked by the charges of sexual assault and attempted rape against its chief.

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Brazilian criticizes wealthy nation’s policies

Binyamin Appelbaum – The New York Times, 04/16/2011

Finance Minister Guido Mantega of Brazil on Saturday. Photo: Mike Theiler/European Pressphoto Agency.

Brazil’s finance minister said Saturday that developed nations like the United States were seeking to solve their own economic problems at the expense of the developing world.

The minister, Guido Mantega, said wealthy countries were attempting “to export their way out of difficult economic situations” by printing money and keeping interest rates low. Those policies are driving up the prices of food and oil, causing particular pain for the world’s poorest people, Mr. Mantega told the policy-making committee of the International Monetary Fund.

His strong remarks highlight the challenges the United States and Europe face as they try to change their economic relationship with the developing world. In place of unsustainable borrowing to fuel consumption of imported goods, they would like to sell more goods and services to those countries. The problem is that developing nations, losing business from their best customers, hope to replace sales by increasing domestic consumption — selling to the same customers developed nations are trying to reach.

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Brazil defends economic policy; IMF stresses basics

Jason Lange, Jeff Jones – MSNBC/Reuters, 03/27/2011

Brazil on Sunday defended its unorthodox strategies to cool its economy as the International Monetary Fund cautioned Latin America not to forget its basic tool for fighting inflation: the cost of money.

Central bankers mainly use interest rates to guide an economy.

But policymakers in Brazil, which has some of the highest interest rates in the world, have suggested they will increasingly use measures including curbs on bank lending to complement rates, reducing bets on the pace of hikes.

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