New York Report

Brazilian Finance Minister Antonio Palocci was in a self-confident mood this week. In a swing through New York, he told investors, bankers and business leaders that “For years we talked about crises. Next year we will be talking about the continuation of long-term growth, we won’t be using the word ‘crisis’.” Palocci said Brazil is better situated to handle volatility now that it has inflation in check, and slashed the government’s dollar-linked debt. Henrique Meirelles, Central Bank governor, defended his tough stance on inflation – he has pushed short-term interest rates to 19.25% – by underlining how lower inflation contributes to lower interest rates in the long term. Joaquim Levy, treasury secretary, echoed Meirelles when he underscored the importance of sustainable growth. “Reducing fiscal risk is task number one and reducing the size of our debt is the way of achieving that,” he said. Levy highlighted the rising level of domestic savings in Brazil as a “degree of protection that is very important if the external environment changes.” Levy pointed to the buoyancy in Brazil’s primary equity markets and the number of initial public offerings as evidence of the higher degree of confidence. Palocci and Levy said growth is starting to benefit lower-income groups through job creation and through improved access to the banking system.