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 economy faces gloomy outlook without reforms- IMF

Alonso Soto – Reuters, 10/07/2014

The Brazilian economy will likely have a mild recovery next year as electoral uncertainty fades, but still lag regional peer Mexico that should grow faster after a series of economic reforms, the International Monetary Fund said on Tuesday.

The global lender cut its growth forecast for Latin America’s largest economy by 0.6 percentage point to 1.4 percent in 2015 due to dwindling investment and moderation in employment and credit growth. In its flagship “World Economic Outlook,” the IMF also revised down Brazil’s growth for this year to just 0.3 percent from its July estimate of 1.3 percent.

Four years of lackluster growth in a once-booming Brazil have brought the economy to the center of a political debate between leftist incumbent Dilma Rousseff and pro-market candidate Aecio Neves in what is expected to be a tight second-round of presidential elections on Oct. 26.

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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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Brazil Real Intervention Out of Sync With Slowdown, IMF Says

Sebastian Boyd – Bloomberg, 7/29/2014

The International Monetary Fund said Brazilian central bank President Alexandre Tombini shouldn’t shore up the real as Latin America’s largest economy stalls and inflation accelerates.

Adjusting for inflation, Brazil’s currency was 5 percent to 15 percent stronger than “implied by fundamentals and desirable policies” in 2013, IMF economists wrote in a research report published today. The real has appreciated 5.9 percent this year against the dollar while inflation accelerated to a 13-month high and economic growth slowed.

The central bank said last month it was extending through the end of 2014 a currency intervention program aimed at helping to boost the real and curb prices for imports. After nine consecutive increases in the target lending rate, policy makers held it at 11 percent on July 16 for a second straight meeting. The central bank didn’t return phone and e-mail messages seeking comment today.

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BRICS Fight Waning Clout With $150 Billion Deal at Summit

Raymond Colitt and Arnaldo Galvao – Bloomberg, 7/14/2014

The leaders of five of the world’s largest emerging markets will showcase a new currency reserve fund and development bank this week. Critics say neither is enough to revive the group’s waning clout.

Brazil, Russia, India, China and South Africa, known as the BRICS, will approve the creation of the $100 billion reserve fund and $50 billion bank at a July 15-16 summit in Brazil’s coastal city of Fortaleza and the capital Brasilia, President Dilma Rousseff and other officials said last week. Negotiators are still trying to agree on shareholding in the bank, according to three Indian officials who requested not to be named because the talks were not public. India wants member stakes to be based on contributions not on economic weight.

The initiatives are born out of frustration with a lack of participation in global governance, particularly in the World Bank and International Monetary Fund, said Arvind Subramanian, senior fellow at the Peterson Institute for International Economics. The measures aren’t big enough to boost growth or cohesion in the group as foreign investor sentiment sours and member states focus on issues close to home, such as Brazil’s elections, the conflict in Ukraine and new economic policy plans in India.

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IMF says U.S. drives growth as Russia, Brazil weaken: economy

Sandrine Rastello – Bloomberg, 4/8/2014

Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the International Monetary Fund said.

The U.S. is providing a “major impulse” to global growth that’s still lumbering amid weakness in Japan and parts of Europe, the IMF said in a report today. While the U.K. and Germany are adding to momentum, developing nations face new risks and Russia’s takeover of Crimea last month injects geopolitical tension that’s “casting a pall” on the region, the fund said.

The IMF urged emerging markets to prepare for flows of capital back to advanced economies, and advised the European Central Bank that more monetary easing is needed now to keep deflation at bay. The U.S. will benefit from a longer period of record-low interest rates orchestrated by the Federal Reserve, strong private demand and the end of a fiscal drag that slowed growth last year, it said.

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Brazil raises G20 stakes on IMF funding pledge

Luciana Otoni and Krista Hughes – Reuters, 06/13/2012

(Reuters) – Brazil raised the stakes ahead of next week’s Group of 20 summit on Tuesday by saying it may cap its contribution to a planned funding increase for the International Monetary Fund unless there are firm promises to give emerging markets more say at the international table.

While summit-host Mexico urged Europe to quickly finalize details of aid for Spain’s banks, Brazil said it might contribute less than it had planned to the extra $430 billion promised to the IMF by member states in April to help fund heavily indebted euro zone countries.

The euro zone sovereign debt crisis is set to dominate the June 18-19 G20 leaders’ meeting in Los Cabos as it did the last summit in Cannes, France, six months ago. The meeting starts a day after Greek elections which could decide whether the country stays in the euro zone.

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