LatinFinance - March/April 2014 - 39

BRAZIL
mACRO

It will take more than rhetoric for Brazil to regain credibility in global
markets. A new fiscal plan might be part of the solution, but investors are
likely to demand a lot more. By Thierry Ogier

Time to act

nce again, it's crunch
time for Brazil's policymakers.
officials from latin america's biggest
economy have, in recent months,
embarked on yet another frenetic round
of marketing, this time in a bid to convince
the world that Brazil does not deserve
to be ranked among the countries most
vulnerable to rising US interest rates - the
fragile five, as morgan Stanley dubbed
Brazil, india, indonesia, South africa and
turkey in a report last summer.
But it's a message that not everyone
is buying: at a congressional hearing in
february, US federal Reserve chairwoman
Janet Yellen referred explicitly to Brazil
as among the emerging markets most
vulnerable to a reversal in capital flows.
President Dilma Rousseff and her
team are likely to need more than words
in trying to convince markets that their
claims about Brazil's economic health
and prospects hold water. the finance
ministry has already been spurred into
action, announcing in february that it
will cut 44 billion reais ($18.5 billion) from
this year's budget as policymakers look
to rein in inflation and shore up fiscal
management amid warning of a rating
downgrade.
But political leaders must also show that
their hands are not tied when it comes to
taking tough economic measures in the
run up to october's presidential election,
at a time when anxiety in global markets is
running high - especially over the fate of
emerging markets.

Source: AP

O

INTO THE LIGHT: Brazil's president Dilma
Rousseff is working hard to win back public
opinion

Luiz AwAzu PereirA,
centrAL bAnk of brAziL

"Here, we Are
AwAke: On Alert, 25
HOurs A dAy, eIgHt
dAys A week. nO One
Is sleepIng At tHe
wHeel. tHere's nO
rest, And tHIs Is
HOw It sHOuld Be.
tHere Is nO cOmplAcency: tHere Is nO
denIAl - just A perIOd Of trAnsItIOn"

New normal, or new perils?
luiz awazu Pereira, deputy governor
at the Brazilian central bank says the
broader implications of a changing
external environment are "quite clear."
"the normalization of US monetary policy
will be better for everybody," he tells
LatinFinance in an interview.
Brazil's central bank, he says, was
proactive in responding to the US federal
Reserves's decision to wind down its
bond-buying program - a move that has
led to widespread unease across emerging
markets. as Pereira puts it: "the response
has been conducted in a cool-headed
manner in Brazil. We understood that
this movement of euphoria would at
some point lead to a reversal, and that
we would need to have the instruments,
reserves and policies ready to soften the
March/April 2014 - l atinfina nce.com 39



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LatinFinance - March/April 2014

Table of Contents for the Digital Edition of LatinFinance - March/April 2014

Contents
LatinFinance - March/April 2014 - Cover1
LatinFinance - March/April 2014 - Cover2
LatinFinance - March/April 2014 - Contents
LatinFinance - March/April 2014 - 2
LatinFinance - March/April 2014 - 3
LatinFinance - March/April 2014 - 4
LatinFinance - March/April 2014 - 5
LatinFinance - March/April 2014 - 6
LatinFinance - March/April 2014 - 7
LatinFinance - March/April 2014 - 8
LatinFinance - March/April 2014 - 9
LatinFinance - March/April 2014 - 10
LatinFinance - March/April 2014 - 11
LatinFinance - March/April 2014 - 12
LatinFinance - March/April 2014 - 13
LatinFinance - March/April 2014 - 14
LatinFinance - March/April 2014 - 15
LatinFinance - March/April 2014 - 16
LatinFinance - March/April 2014 - 17
LatinFinance - March/April 2014 - 18
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LatinFinance - March/April 2014 - 33
LatinFinance - March/April 2014 - 34
LatinFinance - March/April 2014 - 35
LatinFinance - March/April 2014 - 36
LatinFinance - March/April 2014 - 37
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