The director of the Western Hemisphere Department at the IMF, Nicolas Eyzaguirre told reporters, in a press conference in São Paulo, southeastern Brazil, that the growth of Brazil in 2010 should be higher than previously forecasted by the institution, 3.5%.
Eyzaguirre also pointed out that one of the ways to avoid a new recession would be the establishment of a global insurance to avoid the world economy remaining dependant on the production of dollars by the United States.
"If everyone accumulates reserves in dollars, the United States have an enormous subsidy and we do not use this money for other things, like education and infrastructure. We need a multilateral organization that is not the Federal Reserve (Fed) to do this regulation."
He also emphasized that, in case there is a firm financial system, there may be a return to the credit crisis. "This is a possibility that we cannot discard."
Antônio Henrique Silveira, Economic Follow-up secretary of Brazil's Finance Ministry, who also participated in the press conference, said that the government of Brazil sees the stimulation of credit as the first step for recovery after the crisis.
Different from the IMF report for Latin America and the Caribbean, which states that there is no relation between international reserves and the recovery of emerging nations, Silveira said that the accumulation of reserves by the country contributed to mitigating the crisis and should be maintained.
Regarding the North American interest rate, the IMF document showed that the Fed needs to keep it low. "Then, the United States is going to enter a deflationary spiral. In our point of view, the risk of this happening is very great," said Eyzaguirre.
Regarding the tax on foreign investment in Brazil, the IMF director said that the organization cannot comment on the matter, as it is a matter of fiscal policy sovereignty, but added that the IMF recommendation to Brazil is that the "entry of foreign capital be made safe."
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