Brazil’s strange reversal at the IMF

August 2, 2013

David Bosco – Foreign Policy, 08/01/2013

Brazil’s representative at the International Monetary Fund, Paulo Nogueira Batista, made waves this week when he loudly criticized the latest round of international funding for Greece. Nogueira Batista reportedly abstained when the fund’s executive board approved the latest installment of the IMF loan package. Now the story gets more complicated. The Financial Times is reporting that Nogueira Batista wasn’t authorized to take the position he did (h/t Oliver Stuenkel):

“Brazil reversed its hardline stance on Greece’s bailout on Thursday, saying it had not authorised its representative to the International Monetary Fund to withhold support for the latest aid to Athens.

Guido Mantega, the country’s finance minister, said it was a “mistake” for Brazil’s representative, Paulo Nogueira Batista, to abstain on the €1.8bn tranche of aid. Mr Mantega said he fully supported the IMF’s efforts to supply financial aid to Greece.

“[Mr Nogueira Batista] did not consult the government, nor was he authorised by us to vote in this manner and the finance minister has ordered him to return to Brazil immediately to explain himself,” Brazil’s finance ministry said on Thursday.”

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Brazil says backs IMF aid to Greece, call back representative

August 2, 2013

Alonso Soto – Reuters, 08/01/2013

Brazil called back its International Monetary Fund representative on Thursday after he voiced opposition to fresh loans for debt-ridden Greece, a stance that the South American country said was taken without its support.

Brazilian Finance Ministry Guido Mantega on Thursday phoned IMF managing director Christine Lagarde to clarify that its representative, Paulo Nogueira Batista, criticized additional aid for Greece without the authorization of the government.

Batista, who also represents 10 other nations at the Washington-based Fund, on Wednesday publicly criticized the IMF executive board’s recent decision to release 1.7 billion euros of rescue loans to Greece. Brazil abstained from the vote.

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Brazil refused to back new IMF aid for Greece, says billions at risk

July 31, 2013

Anna Yukhananov & Harry Papachristou – Reuters, 07/31/2013

Eleven Latin American countries refused to back an IMF move this week to keep bankrolling Greece, citing risks of non-repayment, and the Fund itself said Athens might need faster debt relief from Europe.

The abstention by Latin American states from the IMF decision was revealed by their Brazilian representative in an unusual public statement on Wednesday, highlighting growing frustration in emerging nations with Fund policy to rescue debt-laden Europeans.

“Recent developments in Greece confirm some of our worst fears,” said Paulo Nogueira Batista, Brazil’s executive director at the IMF, who also represents 10 small nations in Central and South America and the Caribbean.

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Lagarde to explain shift in capital curbs as Brazil demands more

December 10, 2012

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

November 21, 2012

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

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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