IMF Says Brazil Must Pursue Austerity, Meet Targets

Paulo Trevisani – The Wall Street Journal, 5/12/2015

BRASÍLIA—Brazil’s government needs to implement its plans to improve its financial situation and bring price increases under control to help restore confidence, competitiveness and growth to the economy, the International Monetary Fund said in a report published Tuesday.

“Fiscal consolidation should proceed without delay along the announced lines, while monetary policy should remain tight to bring inflation to target,” the report said.

Finance Minister Joaquim Levy, who took office in January, is pushing spending cuts and higher taxes to plug a budget hole caused by years of costly economic stimulus.

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Brazil dismisses IMF assessment of economic vulnerability

Cihan News Agency, 7/31/2014

Brazilian Minister of Finance Guido Mantega has rebutted a report by the International Monetary Fund (IMF) where it rated Brazil among the emerging economies most vulnerable to external crises. In his remarks on Tuesday (July 29), he said economic indicators for the first half of 2014 show that foreign investors remain interested in the country, in spite of the US Federal Reserve (Fed) tapering its quantitative easing measures. The minister also noted that foreign direct investments – which create jobs in the country – have remained above $60 billion in 12 months for the fourth straight year. Moreover, Mantega said, the Brazilian real appreciated 9.4% in the first semester, and the São Paulo Stock Exchange (BOVESPA) was up 21.25% in the same period.

According to Mantega, the report was prepared by lower echelons of the IMF and repeats the same mistakes of earlier documents disclosed by financial institutions and international organizations that report a “perfect storm” for Brazil’s economy this year and place Brazil among the five weakest emerging countries. “The storm never came, the scenario described by the reports wasn’t fulfilled,” he said.

The minister pointed out that Brazil has the fifth largest international reserves in the world, around $380 billion. The sum exceeds the public and private external debt of $330 billion, enough to see Brazil through for a long time in the event of a shortage in foreign capital.

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The New Development Bank adds substance to the BRICS

Carlos Eduardo Lins da Silva – Executive editor of Política Externa, Wilson Center Global Fellow


Its initial landing, projected at US$ 3.6 billion a year starting in 2016, will limit the bank’s impact

The sixth summit of the BRICS took place at a time of low economic growth for the group. The BRICS gained prominence after the global financial crisis of 2008, which put the leading capitalist economies on the brink of the abyss and made room for big emerging countries at the decision making table.

The average growth for the five countries in 2014 is expected to be to around 5%, or half of what was recorded eight years ago, with one important difference: unlike 2008, the large economies are now recovering from higher levels of development when compared with the BRICS.

The group made important institutional progress in its sixth summit, held in the Brazilian city of Fortaleza. The event marked the official launching of the New Development Bank. However, it did not elevate the BRICS to an organization capable of substantially influencing global geopolitics and effectively countering the established economic powers or challenging the apparatus they built after World War II to ensure hegemony in the macroeconomic policy decision making. Continue reading “The New Development Bank adds substance to the BRICS”

Rousseff and Mantega dispute IMF report on Brazil as “incoherent”

Merco Press News, 10/28/2013

Rousseff said Brazil had made progress in several fields in the past few months, since the government announced measures in response to spontaneous anti-government protests in June. One of the government’s pledges at the time, she said, was to ensure fiscal responsibilities.

Finance Minister Guido Mantega also criticized the IMF report as incoherent and probably compiled by technical personnel not very familiar with Brazil’s measures. Mantega said IMF chief economist Olivier Blanchard was much more in tune with the measures implemented in Brazil.

“The IMF evaluation of Brazil’s fiscal policies and debt management is mistaken and should be revised”, Finance Minister Guido Mantega said.

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How the shutdown and possible default affect Latin America: trade and growth in the region would take major hit

Patricia Rey Mallén – International Business Times, 10/14/2013

As the United States holds its breath waiting for the resolution on the shutdown, so does Latin America. The fiscal crisis that began two weeks ago with the closing of the U.S. government and could culminate in a U.S. debt default in a few days could have disastrous consequences for the United States’ southern neighbors, hurting the currency exchange rates and weakening the region’s growth.

The U.S., still Latin America’s largest trade partner and investor, must decide whether it will raise the debt ceiling, currently at $16.7 trillion, or suspend payments to bondholders. If that were to happen, possibly as soon as October 17, the world economy would suffer another blow, starting in Latin America and the Caribbean.

“The region is in a very complex situation due to the fiscal crisis and the shutdown,” Colombian financial analyst Juan Alberto Pineda told financial newspaper El Economista América. “The signals that are coming out [of Washington] do not look positive for Latin American exports, or an exchange rate that allows the region to compete in global trade.”

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Former IMF fiscal affairs director says Brazil may loose fiscal compass

Estado de S. Paulo, 09/21/2013

Brazil’s primary budget surplus lost value as an indicator of the situation of the country’s public accounts, assessed economist Teresa Ter-Minassian, who believes the country is in danger of “loosing its fiscal compass” due to the accounting maneuvers used to try to keep the indicator within the official target.

Teresa, former director of fiscal affairs for the IMF, criticized the exclusion of expenses and the use of extraordinary revenues to increase the value of the indicator. “The budget surplus accounts for a universe that is becoming smaller and smaller,” she stated.

Read full article in Portuguese here.


IMF encouragement for Brazil’s economy gradual upturn

MercoPress, 08/29/2013

“Brazil’s economy is recovering gradually from the slowdown that began in mid-2011,” the IMF Executive Board said in its annual assessment of the Brazilian economy on Wednesday.

It hailed the Brazilian government for beginning this year ”to focus on alleviating supply-side constraints (including infrastructure bottlenecks) and containing inflationary pressures by tightening monetary policy”.

IMF board stressed that “comprehensive efforts to boost productivity, competitiveness, and investment are critical for raising potential growth”.

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