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.
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.
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.”
Alonso Soto and Peter Murphy – Reuters, 12/02/2011
Major emerging economies will offer cash to help resolve Europe’s debt crisis so long as they gain influence at the IMF and Europe does more to address its own problems, Brazil’s economy chief said on Thursday.
European leaders are scrambling for a definitive end to a spreading debt crisis that is dragging down global growth and could even spell the end of the 17-nation euro zone.
Finance Minister Guido Mantega said Brazil and fellow BRICS nations were willing to boost their funding to the International Monetary Fund to counter the debt crisis, which is increasingly threatening their own economic growth.
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.
Brazil may throw its support behind Mexico’s central bank chief Agustín Carstens in his long shot bid to become the next head of the International Monetary Fund, according to Brazil’s representative at the IMF, Paulo Nogueira Batista.
Mr. Nogueira Batista, an executive director at the Fund, said Mr. Carstens had impressed many Latin American countries with his extensive experience during a recent visit to lobby for the position, but added that the chances of any candidate from an emerging market winning the post were still slim.
The heavy favorite to become IMF chief is still French finance minister Christine Lagarde.
Mexico Central Bank Governor Agustin Carstens will meet with his counterpart from Brazil today in a bid to rally support among emerging markets for his flagging candidacy to lead the International Monetary Fund.
Since being nominated May 22, Carstens has picked up a single endorsement abroad, from Uruguay, as leaders from Europe unite around a rival bid by French Finance Minister Christine Lagarde.
His visit follows one by Lagarde on May 30, when she met with Finance Minister Guido Mantega. A Brazilian official said the following day that the government will privately support Lagarde in the race to succeed Dominique Strauss-Kahn as managing director.