Government says Brazil gearing up for international unrest

Brazil relies on solid economic foundations and has in its hands the tools necessary to cope with international turbulence, the Finance Ministry declared moments ago. In a note on the departure of the United Kingdom from the European Union, the ministry noted that the country is gearing up for global economic instability.

The ministry described Brazil's international reserves as bulky, and said direct foreign investment has made its entry into the country in amounts large enough to cover the deficit in external accounts. These two factors, the ministry argued, help curb pressures for future dollar hikes.

The communication highlights that the conditions to address Brazil's public debt remain solid despite the volatility facing finance markets—not least because the National Treasury has a large enough liquidity cushion (funds reserved for paying the public debt), and also because, unlike a number of other countries, Brazil's public debt is consists mostly of government bonds in Brazil's own currency, the real—not in dollars, or euros.

The Finance Ministry declared the government has recently announced efforts to hold the increase in public spending in check on the long run. “The recent improvement seen in  confidence indicators and in the perception of risk in the country is a reflection of such moves,” the note reads.

Translated by Fabrício Ferreira