OECD Sees Brazil 2016 Recession Deepening to 4% Drop

David Biller – Bloomberg, 02/18/2016

The OECD more than doubled its forecast for Brazil’s 2016 recession, projecting it will be even worse than last year. That makes it more bearish than the International Monetary Fund and most analysts surveyed by Bloomberg.

Brazil’s economy will contract 4 percent this year after a 3.8 percent recession in 2015, the Organization for Economic Cooperation and Development said Thursday in a report. The 2016 forecast was revised down from a prior 1.2 percent decline, and is worse than estimates of all but two of 35 analysts surveyed by Bloomberg. Their median forecast is for a 2.8 percent drop this year after a 3.7 percent decline last year.

Latin America’s largest economy is sinking as demand withers. Consumers who for most of the past decade have been Brazil’s growth engine have had their confidence shot by rising joblessness and double-digit inflation. At the same time, investment has been rattled by the nation’s largest-ever corruption scandal, and the government is struggling to implement a fiscal adjustment to shore up its finances.

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Colombia to Leave Brazil IMF Group for Mexico’s, Uribe Says

Sandrine Rastello, Matthew Bristow – Bloomberg, 10/13/2012

Colombia will leave Brazil’s group at the International Monetary Fund and join one headed by Mexico as part of a reshuffle at the lender’s board of directors, central bank chief Jose Dario Uribe said.

“It’s a group where there’s a receptivity towards a country like Colombia, where there are great historical and commercial ties,” Uribe said in an interview in Tokyo today, where he is attending the IMF’s annual meetings. “It’s a group, without doubt, of interest.” Nicaragua, Cape Verde and East Timor will be added to Brazil’s constituency, according to an IMF document obtained by Bloomberg News.

Brazil has been one of the most vocal of the IMF’s 188 member countries, pushing policy makers to grant emerging markets more say at the institution and criticizing guidelines on capital controls. Brazil’s increasing clout on the global stage probably makes it challenging for a nation like Colombia to be heard, said Bessma Momani, a political science professor at the University of Waterloo in Canada.

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BRICS demand bigger IMF role before giving it cash

Walter Brandimarte and Louise Egan – Reuters, 04/19/2012

IMF Managing Director Christine Lagarde listens to a question at a news conference at the Spring Meetings 2012 of the IMF and World Bank Group in Washington, April 19, 2012. 

Credit: Reuters/Larry Downing

 

The International Monetary Fund’s bid to win a big boost in funding to handle the euro-zone debt crisis hit a speed bump on Thursday whenBrazil demanded more power at the IMF for emerging economies as a condition for lending it extra cash.

Brazilian Finance Minister Guido Mantega laid out the terms for a deal after a meeting with fellow BRICS nations Russia, India, China and South Africa.

“We are not ready to set a figure, because there are preconditions that have not been fulfilled by the countries – whether they will comply with the agenda of reforms,” he said.

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Big spender: Brazil’s international lending ventures

Rachel Glickhouse – AS-COA, 04/09/2012

Brazil's development bank has a loan portfolio three times that of the World Bank. (Photo: BNDES official website)

As Brazil pushes for a greater voice for emerging powers in international lending institutions, it is striking out on its own, investing in global lending from its expanding development bank and pursuing new organizations of developing countries. While the country explores the creation of new development banks—one within Latin America, and the other with the BRICS—it has already amassed a loan portfolio three times the size of the World Bank. Its lending ventures are allowing Brazil to pursue a geopolitical strategy to consolidate itself as a global power.

First, Brazil wants to expand its power within existing lending institutions, including the International Monetary Fund (IMF) and World Bank. While the IMF voted to expand the vote for emerging countries at the IMF in 2010, the United States has yet to pass legislation for the quota to take effect. Brazil’s representation would have increased to 2.3 percent this year; it currently stands at 1.79 percent. During a BRICS summit in late March, Brazil, along with China, India, Russia, and South Africa said it would only increase lending to the IMF if the institution gave those countries more voting power. At the World Bank, Brazil urged the institution to elect a non-U.S. president this year and nominated former Colombian Finance Minister José Antonio Ocampo for the job. In addition, Brazil saw its World Bank voting share increase to 2.24 percent from 2.06 percent in 2010, giving it the largest share in Latin America. Toward the end of his administration, Brazil’s former President Luiz Inácio Lula da Silva rallied for developing countries to have a greater say in financial institutions, telling the UN General Assembly inn 2009: “Poor and underdeveloped countries must increase their shares in the IMF, World Bank. Only more representative and democratic international agencies will be able to deal with complex problems like reorganizing the international monetary system.”

Facing slow progress at existing lending institutions, Brazil is pursuing the creation of new organizations. Brazilian President Dilma Rousseff participated in discussions to create a development bank with the four other emerging economies in the BRICS group at its annual summit last month. The bank would invest in infrastructure, sustainable development, and trade in developing countries, as well as shield against external economic crises. The idea would be to avoid conditionality, in contrast with loans from the World Bank or IMF which sometimes require economic or legal reforms. While the bank’s viability is assessed, Brazil sees working with the BRICS as part of its geopolitical strategy. In an op-ed for the Times of India, Rousseff said cooperation between the BRICS “changes the axis of international politics.”

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Brazilian financial system strong but needs more long-term financing – World Bank

Dow Jones/NASDAW, 03/21/2012

Brazil’s financial and banking systems are strong and stable, but the country needs to develop more long-term financing mechanisms to assure sustained growth, representatives of the International Monetary Fund and the World Bank said Wednesday.

The officials made the recommendations following meetings with local central bank authorities to discuss a financial-sector assessment program report, scheduled for release later this year.

“Capital markets development is still impeded by high interest rates and the short duration of most financial instruments, but aided by stronger public finances and a credible monetary policy in place over a decade, the economy has started to move away from this equilibrium,” they said in a statement following the meeting.

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Brazil’s European dream

Eduardo J. Gomez – Foreign Policy, 03/20/2012

Angela Merkel and Dilma Rousseff. (Foreign Policy)

The news that Brazil has overtaken Britain to become the world’s sixth largest economic power is being touted as a sign that that the longtime “country of the future” has finally arrived. While the celebrations have been somewhat muted by concerns over slowing GDP growth and the country’s still-heavy dependence on high energy and food prices, Brazil is heading into the coming global showcases of both the 2014 World Cup and the 2016 Summer Olympics with more than its usual swagger.

But this emerging economic prominence is raising the question of just what kind of actor Brazil will be on the world stage. In the past 20 years, Brazil has become well known for turning crisis situations into geopolitical opportunities, becoming a leading voice in international forums devoted to AIDS, poverty, and even the environment. And now, it is doing it again with a challenge that Brazilians understand all too well: a debt crisis.

Only this time, it’s Europe in need of a helping hand, not the former Portuguese colony in Latin America. At an EU-Brazil summit held in Brussels last October, President Dilma Rousseff told European leaders, who had asked for assistance: “You can rely and count on us.” As an initial strategy, Rousseff and her finance minister, Guido Mantega, considered using their foreign exchange reserves — estimated at $352 billion — to purchase debt through treasury bonds. However, after consulting with her BRIC colleagues at a meeting in Washington last November, Brazil decided that buying EU bonds would be too financially risky, and proposed instead to indirectly assist Europe by donating an estimated $10 billion to the International Monetary Fund.

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IMF Brazil representative: More Greek financing gaps likely

Ian Talley – Dow Jones/ WSJ, 03/16/2012

Brazil’s representative to the International Monetary Fund Thursday warned that Greece likely faces further financing shortfalls despite a new EUR130 billion loan program for the debt-plagued country.

“The economic, political and social situation in Greece is still giving me reasons for deep concerns,” said Paulo Nogueira Batista, the representative to the IMF for Brazil and eight other countries. He said his comments represent only his personal views.

Batista confirmed in an interview he abstained from the executive board’s decision on Greece Thursday. Since the board rarely actually votes, instead gathering consensus before a meeting, an abstention is a diplomatic way to oppose board action. According to people close to the matter, he was the only abstention, despite several board members fearing political risks may derail the program.

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Brazil against U.S. taking World Bank job

UPI, 02/16/2012

Robert Zoellick, president of the World Bank Group, speaks at a discussion titled "Spurring Global Economic Growth: Unlocking Capital for Women Entrepreneurs," at the World Bank in Washington, D.C. on December 14, 2011. (UPI/Kevin Dietsch)

Brazil sent the strongest signals yet it wants the World Bank’s top job going to the citizen of a country other than the United States.

In the latest twist to the campaign to have top jobs at the International Monetary Fund, World Bank and the United Nations distributed among nationals of countries outside North America or Europe, Brazil informed the World Bank it wanted an end to the current practice of a European heading the IMF and a U.S. citizen taking the bank’s presidency.

The practice has been followed in appointments to the top jobs at the two financial institutions since 1945.

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