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Brazzil - Economy - May 2004

The IMF Stunted Brazil

Of the five world's giant countries (the United States, China,
India, Russia, and Brazil), Brazil is in the worst shape economically.
According to UNCTAD's secretary-general, Brazil has not grown for
two decades and the country's current economic policy is
unlikely to produce economic growth in the short term.

Daisy Nascimento


Picture The secretary-general of the United Nations Conference on Trade and Development (UNCTAD), Rubens Ricúpero, believes that "Brazil stands at a crossroads fraught with uncertainties."

He made this declaration to International Relations students at the University of Brasília (UnB) during a talk entitled "Where is the world headed today? A Brazilian perspective on world political and economic problems."

Brazil, according to Ricúpero, is a "giant country"—a classification joining two characteristics: its territorial dimensions and its enormous population. "The interaction of these two characteristics is what creates its complexity," he affirms.

Ricúpero recalled that of the five "giant countries"—the United States, China, India, Russia, and Brazil—, Brazil is in the worst shape economically. "The key to Brazil's problem still lies in its socio-economic development. For two decades Brazil has not grown," he informs. For Ricúpero, Brazil's current economic policy is unlikely to produce economic growth in the short term.

The financial trap that binds that Brazilian economy is its excessive dependence on international markets, in Ricúpero's opinion. He proposes a reduction in financial dependence, following the example of the 41 countries of Asia and Oceania.

Their economies are developing thanks to accumulated reserves. "Their promise is they should grow 6 percent for the next decade," the Ambassador estimates. He observed that countries like India and China never submitted to rules dictated by international financial institutions like the IMF (International Monetary Fund).

Ricúpero recognizes that alliances with countries that are more solid economically, such as China, India, and South Africa, can make Brazil's problems more visible to international organizations, on an international agenda currently dominated by the resolution of conflicts.

Brazucas' Dollars

The transfer of funds from abroad by Brazilian emigrants who work outside Brazil is the theme of the first national conference on this subject. The conference is being held in Rio de Janeiro with the participation of representatives of the government, multilateral institutions, national and foreign private financial entities, non-governmental organizations, and foundations.

The meeting "Transfers as an Instrument of Development" is sponsored by the Getúlio Vargas Foundation's School of Public and Business Administration (Ebape/FGV), in partnership with the Inter-American Development Bank's Multilateral Investment Fund (Fumin/IDB).

According to IDB studies, presented at the Bank's annual meeting in March, Brazilians sent US$ 5.2 billion to Brazil last year. The encounter will assess the impact of these transfers as an instrument of economic development and their importance to the balance of Brazil's external accounts. Ways to reduce the costs of transferring funds to the country will be discussed.

The IDB hopes, for example, that the Brazilian Central Bank will consider the possibility of tax exemption for transfers of up to US$ 1,000. According to Donald F. Terry, manager of the Fumin/IDB, the rules currently in effect may be hampering domestic investments.

According to Terry, transfers that are now used to take care of the basic needs of Brazilian families could be redirected to savings, home purchase plans, and small investments, if the rules were modified.

Daisy Nascimento works for Agência Brasil (AB), the official press agency of the Brazilian government. Comments are welcome at lia@radiobras.gov.br.
Translated from the Portuguese by David Silberstein.

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