Brazil Needs ‘Credibility Shock’ to Allure Investors

Brazil needs to shift away from ad-hoc measures to boost growth and focus on a long-term policy to reassure investors, according to Barclays Plc and Bradesco Asset Management.

“Brazil needs a credibility shock,” Marcelo Salomon, the co-head for Latin America economics at Barclays, said today at an event in New York organized by the Brazilian-American Chamber of Commerce. “We saw 42 different measures to stimulate growth and control capital in a year. That’s a lot of noise, and that has a cost.”

President Dilma Rousseff has pushed banks to reduce profit to “civilized levels” and changed utility contracts to lower electricity rates among other efforts to stoke growth and curb inflation. Brazil’s economy grew at the slowest pace in three years last year while inflation has exceeded the 4.5 percent midpoint of the central bank’s target for 29 consecutive months.

Voting shares of Centrais Eletricas Brasileiras SA, the country’s largest power utility, have plunged 62 percent in the past year. State-run lender Banco do Brasil SA slipped 14 percent in the same period.

“With all the good intentions, they haven’t been very helpful to investments,” Joaquim Levy, the chief executive officer of Bradesco Asset Management, a unit of Osasco, Brazil-based Banco Bradesco SA, said during a panel discussion.

Finance Minister Guido Mantega has scheduled meetings with business leaders and investors in Sao Paulo, New York and London as he tries to lure investments to the country’s energy and infrastructure industries, according to a statement from the ministry on Jan. 31.

“We need to perceive a change in stance,” Salomon said. “The government needs to signal that what was done up to now is not necessarily the course that’s going to be taken going forward.”

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