Brazil's economy recovering, says Finance Minister

Brazil's Finance Minister Henrique Meirelles said Brazil's economy is beginning to show good results and reverse the downward trend in confidence indexes. “The curve has already shifted, which shows we are on the right track,” he said at a business award ceremony organized by a leading business magazine Wednesday (Jun. 29).

Meirelles said an accurate diagnosis of the current economic crisis a crucial step in Brazil's current economic downturn scenario to allow us to look for solutions. “In economy, as with life and medicine, it is crucial that diagnosis be accurate. Once we have one, we can set out to work effectively on the causes of the problems,” he said.

In his opinion, the biggest-growing and most successful countries were those that addressed the main problems first, rather than trying to solve them all at once. He said that countries that focused on identifying the main problems and solving them have grown significantly. “The once poor, underdeveloped countries have grown to become industrial powers,” he said.

Talking about the causes of the crisis in Brazil, Meirelles said confidence in the country and its economy has been shaken, which has led to Brazil losing investment and stopping recruiting. He blames these problems on unsustainably growing government spending and public debt.

“The more the government debt grows, the more funds the government needs to raise. These things simply spiral up adversely,” he said, citing unemployment, falling consumption, and a number of chain actions that tend to destabilize the economy.

The minister believes that, in the light of what he calls a “central diagnosis”, Brazil needs to end this unsustainable growth in public spending. The solution, according to him, is a proposed constitutional amendment bill (PEC) currently pending before Congress that limits government spending growth to the inflation rate of the previous fiscal year.

Translated by Mayra Borges