Brazil needs aggressive finance policies as the rest of the world recovers from the economic downturn, according to the frontrunner in the country’s upcoming presidential elections.
‘We are going to have to combine all possible policies to protect ourselves from a phenomenon that I think has already started, of big, aggressive international competition,’ said Dilma Rousseff, outgoing President Luiz Inacio Lula da Silva’s former energy minister.
‘I think we are going to have to have an aggressive financing policy in Brazil. That is already happening in all the countries of the world,’ she added.
Rousseff, the ruling party candidate in the October 3 election, said however that Brazil would not seek to devalue its currency, which has soared in value against the dollar in recent times and has made Brazilian exports increasingly expensive.
She leads opposition candidate Jose Serra in the latest Ibope poll of voters, less than two months before the first round presidential election. She took 39% of the vote in the poll against Serra’s 34%. The distribution of votes was unchanged from the previous Ibope survey released on July 30 and is roughly in line with other polls published in the past weeks.
Most analysts say Rousseff has better chances to win as she can count on support from the hugely popular Lula and will be helped by the rebounding economy. Unlike previous races, there is no clear favourite because neither of the main contenders is expected to break with the mostly market friendly policies in place for the past decade.
Some business leaders prefer Serra for his support of national industry and his managerial experience. But concern is growing in financial markets over his heavy-handed approach to economic policy.
Rousseff also said that the government would not be pumping as much money into its development bank as it had in recent years. The BNDES bank, which provides loans to exporters at favourable rates, has received $100 billion dollars in state funding over the past two years, part of a government effort to offset reduced financial credit access resulting from the 2008 global financial crisis.
‘I don’t think the BNDES needs to be this size. It is only like this because in 2008 we faced one of the biggest economic crises ever, with a significant credit shock,’ Rousseff explained.
National private banks need to be convinced to make more credit available, which would take the pressure off public financing, she added.
Brazil’s economy barely paused during the worst of the downturn and is now booming with annualised growth this year forecast at 7%. The central bank, though, has accumulated $255 billion worth of foreign reserves as it buys dollars in a bid to slow the rise of the national currency, the Real.
Rousseff has pledged to largely continue the Lula administration’s economic policies.
The popular Lula is stepping down at the end of the year after having served his maximum two consecutive mandates.
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