Operation Car Wash causes impact on inbound investment

The threat of electric energy rationing, Operation Car Wash (a probe into fraud and bribery in Petrobras contracts) and the tardy release of Petrobras's financial sheet have caused an impact on the direct investments coming into the country, says head of the economic department at the Central Bank Tulio Maciel.

“As this is gradually being left behind, it tends to exert a positive influence on inbound investment,” Maciel argued, adding that more significant amounts of direct investment are usually reported during the second half of the year.

The Central Bank announced today (Jun 22) that it kept its forecast for this year's Direct Investment into the Country (IDP, in its Portuguese acronym) at $80 billion, the same estimate as the one released in March. This should account for 4.12% of the Brazilian GDP, against the 4.21% previously estimated by the Central Bank. In the five first months this year, the IDP reached $25.520 billion.

When a country's bank account is in the red, one must redress this situation through foreign investments or borrow from abroad. The IDP, funds that come into the country and are earmarked for Brazil's productive sector, is regarded as the best form of financing, as it brings about long-term effects.

The Central Bank's projection for the deficit this year was revised from $84 to $81 billion.

Translated by Fabrício Ferreira