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Indicators included in the Quarterly Inflation Report, released Wednesday, December 28, by Brazil's Central Bank (BC), confirm "consistent results and favorable prospects for future growth."
Such growth is driven by the "accelerated pace of economic recovery from now on," according to the BC's director of Economic Policy, Afonso Bevilaqua, as he explained the figures included in the report. According to Bevilaqua, the BC altered its projections for the current account, which corresponds to all the country's foreign commercial and financial transactions. In consequence of the upward adjustment in the forecast for the trade surplus (exports minus imports) from US$ 38 billion in September to the current estimate of US$ 44.5 billion, the BC raised its estimate for this year's current account surplus from US$ 13.7 billion to US$ 15 billion. The BC director believes that foreign trade will continue in "frank expansion" over the course of 2006, but he calculates that the trade surplus will be smaller than this year's, because imports will increase proportionately more than exports. He predicts that foreign sales will grow from this year's level of US$ 118.5 billion to US$ 124 billion next year, contributing to a US$ 35.5 billion trade surplus and a US$ 6.7 billion current account surplus. 2006 will thus be the fourth year in a row in which Brazil attains a current account surplus, owing mainly to successive foreign trade records, according to Bevilaqua. It was this demonstration of financial soundness, he said, that allowed the country, for the first time, to issue international bonds quoted in reais (Brazil's currency) and, this month, to pay off in advance its US$ 15.5 billion debt to the International Monetary Fund (IMF). He pointed out that the country will still have US$ 53.8 billion in international reserves at the end of the current financial exercise - the highest level of reserves since the adoption of a floating exchange rate in 1998 and double the level of net reserves in December, 2004, when they totaled US$ 27.5 billion. This slack will permit the country to pay off its US$ 2.2024 billion debt to the Club of Paris in January, 2006, also ahead of time, since the repayment period extends through 2007. Bevilaqua reaffirmed that "the indicators of external sustainability are evident," and he said that foreign debt has decreased around US$ 45.7 billion under the current Administration and should close 2005 at around US$ 165 billion, equivalent to 25% of the Gross Domestic Product (GDP). This represents the smallest foreign debt/GDP ratio since 1975, according to the BC director. He also disclosed that the Federal Treasury has already issued US$ 5.646 billion in government titles to pay off the US$ 11.480 billion in debt that comes due next year. Agência Brasil
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