Brazil “did its part” by balancing its economy and won’t pay the price for imbalances in some other countries, central bank president Henrique Meirelles said.
Brazil isn’t adding to imbalances in the world economy and will protect its own economy from contagion from abroad, Meirelles told reporters today in Washington, on the sidelines of the International Monetary Fund’s annual meeting.
“Brazil won’t pay the price for several countries’ imbalances,” Meirelles said. “Our position is: ‘Brazil will protect its economy regardless.’”
Brazil increased its foreign reserves by 16.4 percent this year, to $279 billion on Oct. 7, according to central bank data. The government has vowed to use its sovereign wealth fund to buy dollars in the spot market, if needed. Brazil also doubled to 4 percent a tax it charges foreigners on investment in fixed-income securities in a bid to stem gains in the real, which last week reached its strongest in more than two years.
Meirelles cited, among other factors, the development of its domestic market, the outlook for 2 million new jobs this year, inflation under control and elevated reserves as examples of Brazil’s stability.
Meirelles also said the global imbalance in part reflect moves by some highly indebted countries to adopt expansionary policies, while others, still very dependent on exports, haven’t developed domestic markets.