A First for Brazil in 500 Years: Country Becomes a Foreign Creditor

Brazilian currency, the old real For the first time is its over 500-year history, Brazil has become a foreign creditor. according to the Brazilian Central Bank (BC). Brazil's monetary authority explained that this was only possible due to the reduction of the net foreign debt.

This occurs when the country's assets abroad, mainly in foreign currency reserves, are removed from the gross foreign debt. That is, foreign currency reserves and other assets are greater than the foreign debt.

According to the Central Bank, estimates for the January 2008 closing (to be disclosed next week), is that the volume of the net debt should become negative in US$ 4 billion, as the volume of money invested abroad is now greater than the foreign debt.

"This, in net terms, means that the country has become a foreign creditor, something completely new in the country's economic history," according to the Foreign Sustainability Indices for Brazil, disclosed by the BC.

According to the organization, the total net debt went from US$ 165,2 billion, at the end of 2003, to the US$ 4.3 billion credit estimated at the end of 2007.

To the Central Bank, the results in the foreign sector of the Brazilian economy in recent years show "unquestionable strengthening of the country's foreign situation", due to the trade balance figures (exports minus imports), current transactions (including the trade balance, services and unilateral income and transfers) and the record entry of funds into the country.

"Summarizing, when faced with an international scenery characterized by a considerable increase in uncertainty, by the volatility of foreign markets and by the deceleration of economic activity, the improvement of these figures tends to mitigate, although not totally eliminate, the impact of adverse external effects."

ABr

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  • Show Comments (14)

  • jony

    I am waiting for you Ch.c
    but I don’t have all day!!! Let’s compare resumes. Indicate your qualifications here for every body to see and confirm … and I will provide exactly the same thing!!!! I want from you, and I will be providing the same, undergraduate and university and date of graduation, pos graduate and university with dates and degree obtained, advanced studies and university with dates and degree. Published papers in economics. Books written. If a professor in economics I want the name of the university or institution. If you provide me with this information I will promise you I will officially apologize to you and I will never get in this site again!!
    But you never do it because you hide behind your computer screen with your courageous attacks from far a way without ever being questioned of your self proclaimed economic master. The self-righteous god of the Brazilian economy, right? You are nothing less than a pathetic human experiment going bad. The self-proclaimed Swiss billionaire master of all masters!
    πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜€ πŸ˜€ πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜€ πŸ˜€ πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜€ πŸ˜€ πŸ˜‰ πŸ˜‰ πŸ˜‰

  • jony

    I am still waiting!!!!!!
    Your qualifications… where are they???? πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰

  • jony

    Ch.c, I am looking forward for your answer!!
    AND…???? You are trying to make a point but your stupidity gets in the way πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰ or is it just your limited background in the subject matter? I need references and your qualifications. You must have told me before, but I forgot. Do you have any work in Economics published anywhere? I assume you must have something in the Royal Institute of Economics or even in your own country? If so I would love to read it. Or are you just a PALHACO with an acute superiority complex? I think I know the answer to thatÀ’€¦ Your presumption of intelligence clashes every time you speak πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰

  • ch.c.

    To the junkies….Jony and Eduard C-
    Thus please tell the bonds issued by developed countries…in other currencies than their own !!!!!!!!

    Simple !!!!!!!!!!!!!!

    More junkie than these 2 idiots—–there are not !

  • Eduardo C.

    Know why? Alguma mulher brasileira, meteu um galho em sua cabeΓ€Ζ’Β§a.EstΓ€Ζ’Β‘ parecendo um Alce Canadense

  • Eduardo C.

    Ch.c
    Frustrated ignorant!!

  • Jony

    its ok Jakob…
    Its OK Jakob, Ch.c doesnÀ’€ℒt understand anything about economics either. He is our in- house babbling idiot and entertainer. πŸ˜‰ All you have to do is ask him for the name of the reference book, research data, published paper, doctoral thesis to substantiate his delusional defecated facts and He will never ever give you one… πŸ˜‰ πŸ˜‰
    He has no credentials, no factual knowledge, and apparently no former education either.
    πŸ˜‰

  • The Guest

    JoΓ€Ζ’Β£o
    Great to hear from you. How long are you going to stay in Brazil before your next voyage?

    Sorry about not responding much sooner. I will be in Brazil until the 20th of March. I am still catching up on the news but at a much slower pace than usual due to the lack of my own computer. At this pace, I may not catch up fully until just before I have leave Brazil.

  • The Guest

    Foreign Currency Borrowing
    Ch. c.

    Γ€β€šΒ¨Does USA has a foreign currency borrowing ? NOΓ€β€šΒ¨

    You are right. The USA has no foreign currency borrowing, but it does have a foreign debt based on the US currency. Why is this so? Because the US currency is used world wide for international transactions, more so than any other currency including the EURO.

  • João da Silva

    Jakob
    [quote]Ch. c.
    Neither economics nor finance is one of my strengths, so I can not say much about money flows from/to Brazil.[/quote]

    You made a big mistake by confessing your weaknesses regarding economics and finance to Ch.c. He will harass you for rest of the life of this blog. Ch.c is merciless, vengeful and takes no prisoners.

    However, if you need any help from me to confront him, please do not hesitate to ask πŸ˜€

  • jon

    An interesting article in the most recent TIME magazine about China’s Quick March to the suburbs, as millions are moving to these new residential developments. That will mean more demand for most commodities across the board, like iron ore, copper, oil, etc. Brazil logically has most of this and is currently benefiting from the commodities boom..the only wild card is the long-term trickle down effect to the masses in Brazil πŸ˜₯

  • jakob

    well
    Ch. c.
    Neither economics nor finance is one of my strengths, so I can not say much about money flows from/to Brazil. Perhaps real valuation that we are witnessing will even improve things in this respect?

    In any case, this is good news indeed, I hope a good part of this surplus money will go to both infrastructure (wastewater treatment, railways that Brazil needs so much) and education, instead of going to the politicians’ pockets.

    (Regarding this last item, Policia Federal has lately been doing great work.)

  • ch.c.

    To Jakob !
    Hopefully !

    This said it is quite amusing that Brazil still borrows in foreign currencies, mostly US$ and Euros while having around 180 billion US$ equivalent in foreign currencies reserves.
    Where is the logic ?????

    No developed nation government borrows money in foreign currencies, except in time of crisis and for only a short period of time (1-3 years ) !
    Does one of EU old 12 member countries still owes foreign money outside of Euros ? NO
    Does USA has a foreign currency borrowing ? NO
    Does Japan has a foreign currency borrowing ? NO

  • jakob

    This is good news
    Happy to hear this news … Perhaps Brazil is becoming a country of the present.

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