Word: brazilã
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...China—in 2001, Brazil has often been considered the ugly duckling of the group. Next to a former superpower and two ancient civilizations boasting over one billion citizens, the South American giant may have seemed Lilliputian. But the global economic crisis has made a huge difference. Brazil??s admirable resistance to the current turmoil vindicates its placement. It also strengthens the judgment that the B-side of the BRIC dream is not one of scandalous GDP growth rates, but one of steady 3-7 percent increases per year. Current estimates for 2009 hover around 3 percent...
...what is the connection between Mr. Dantas’ prosecution and growth expectations for Brazil? The case shows that the country is still on a steady march towards fixing problems common to emerging markets. This march started in 1994 with the Plano Real, the monetary stabilization plan that ended Brazil??s inflation crisis as rates breached 2000 percent annually. Fernando Henrique Cardoso, the Finance Minister responsible for this plan, was elected president twice (1994-2002) and started a new era of commitment to responsible economic policy...
...addition to the well-known reforms in monetary policy, another Cardoso legacy was the restructuring of the Federal Revenue, which helped to ameliorate Brazil??s problem with tax collection. The FR beat collection records in all but the first of the Cardoso years. Just as Cardoso transformed the Federal Revenue, Lula is transforming the Federal Police. Today, the RF is a milestone in efficiency, even if it is still no IRS. The PF may be as successful, even if it falls short of FBI standards...
...Despite this and other shifts, Lula’s government is not antagonistic to the legacy of Cardoso’s stabilization policies. The president and his left wing Workers’ Party chose to uphold the economic orthodoxy of their predecessor. Brazil??s interest rate remains among the highest in the world at 13.75 percent. This demonstrates that the left and the right have actually agreed on a plan for the country. Their issues are different—modernization of the tax system vs. freedom for the federal police, or control of the government budget vs. poverty...
...Last April, credit rating agencies recognized this achievement and gave Brazil??s sovereign debt “investment grade” status. But this was a small reward given the shift the country has experienced since 1994. Brazilian government bonds remain too cheap (currently paying over 500 basis points above the 10-Year Treasury). Charging a sky-high political premium to a country that has had a fiscal revolution, and where Daniel Dantas can be arrested through due process of law, seems to be rather exaggerated. The bonds’ inadequate BBB-rating—barely above speculative...