Category: Daily Brief

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.

Citigroup won approval from Brazilian regulators to retake control of three phone companies, defeating a challenge by the former manager of its $728 million investment fund, Daniel Dantas. The decision clears one obstacle to Citigroup’s plans for removing Dantas and the executives he named while he managed the bank’s shares in Brasil Telecom, Brazil’s third-biggest telephone company, and two mobile phone companies. Dantas has been fighting to stay in control of Brasil Telecom since March 9, when he was fired by Citigroup.

Brazil’s Finance Minister Antonio Palocci called on developed countries to lift barriers on farm products from developing nations. Speaking at the International Monetary Fund and World Bank spring meetings in Washington, Palocci said a successful completion of the Doha Round of trade talks would translate into annual gains of $250 billion through 2015, with more than one third of that amount going to developing countries.

Brazilian steelmaker CSN will pay Brascan Brasil R$100 million ($37 million) in cash and stock for Ersa, a tin mine and foundry in the Amazon state of Rondônia. CSN uses 3,600 tons of tin annually to make tin-coated sheet iron, one of the company’s highest-value products and plans to increase production capacity at the mine to 3,600 tons per year and output at the foundry to 4,800 tons per year by 2009.