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For Central Bank Chief, Brazil Is OK and Needs No Change |
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Written by Bruno Bocchini
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Wednesday, 30 November 2005 |
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The president of Brazil's Central Bank (BC), Henrique Meirelles, declared that in light of the international situation and Brazil's improving economic state, it is not a good idea to make changes in the country's economic policies. Meirelles said that it is important to continue the current fiscal policies because they are "responsible."
According to Meirelles, the fact that Brazil is on track can be seen because inflation is being kept to pre-established levels, the debt/GDP ratio is in decline, the exchange rate really floats and the government is moving ahead with microeconomic reforms.
"These are policies that work. They have worked in other countries and they are being successful here in Brazil," he said, adding that this was not the moment to take risks.
Meirelles concluded by saying he did not expect the government to interfere with the exchange rate.
Financial Markets Losses
Brazil's Securities and Exchange Commission (Comissão de Valores Mobiliários) (CVM) reports that in October, while foreign investors put US$ 2.915 billion in Brazilian financial markets, they took out US$ 3.275 billion, for a net loss for the country of US$ 360 million.
However, for the year (January to October) there has been a cumulative gain of US$ 14.6 billion in foreign investments in Brazil.
ABr
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No they dont ! When a country is giving a interest rate of around 13 or 14 % above the inflartion rate, it just attracts the speculative money that will flee the country whenever there is a great rate of rate reduction.
You are the only country in the world doing this.
Do you believe that you are the only country in the world where policies work ? The opposite is the answer !
By borrowing at such a high rate, the country just increases the total debt owned at the same faster speed on top of the fact that their is also the regular increase. You are already highly indebted and the snowball effect is doubled with your stupid rates !
Therefore you borrow new money at inflation rate of 5/6 %, plus 13/14 % additional, plus 8 to 10 % or so as natural increase. Total rate of yearly new debts go up by 25 % or so.
A country that increases its debts at an annual rate of 25 % or so, when inflation is 5/6 %, will have a deep problem in a not too distant future.