Mantega: speculations about his departure are "gossip"

247 - Amid speculation about his departure from the Ministry of Finance, Guido Mantega stated this Wednesday, the 26th, that these comments are "gossip." He is participating in a public hearing at the Finance and Taxation Committee of the Chamber of Deputies.

"These are rumors, occasional reports about my departure," said Mantega. When questioned by parliamentarians about the matter, he added: "If we're going to listen to rumors, [imagine] how many rumors we've heard about the departure of members of parliament [without citing specific situations]."

According to Mantega, "it is irresponsible" to spread news about the departure or dismissal of members of the economic team at a time when the Federal Reserve (FED), the central bank of the United States, is adopting procedures that are generating turbulence in the world economy.

Mantega also said that the Brazilian economy has fiscal and financial stability. He highlighted that inflation is under control and the federal government's primary surplus for 2013 should be at least 2,3%.

"Over the last ten years, we have maintained a surplus above 3%, and in crisis years, around 2%. Brazil's surplus is greater than that of most countries," he emphasized. In May, according to the minister, the surplus was R$6 billion, the largest recorded for the period in the historical series.

According to the minister, the Social Security deficit is under control. And personnel expenses remain around 4% of GDP.

Guido Mantega also emphasized that, in the last two years, the government has lowered interest rates and made the exchange rate more competitive. Furthermore, according to him, the federal government has implemented a program to reduce taxes on investments and production.

"All measures are aimed at reducing costs in the economy and increasing competitiveness. This is how we will guarantee greater economic growth," he stated. In 2012, Brazilian GDP growth was 0,9%.

Brazil is prepared to face international turbulence.

According to Mantega, Brazil is prepared to face the turbulence in the international financial market. "We have prepared a strategy to face the situation, with growth. And if it weren't for the crisis [in the global economy], our average growth would be higher than 3,6%," he said.

The Finance Minister emphasized that the development strategy implemented by Brazil over the last ten years created the conditions to confront a prolonged crisis. According to the minister, the strengths of this strategy were the more vigorous GDP growth, which reached 3,6% annually between 2003 and 2012. Another important factor, he added, was the growth in investments, which reached 6,1% annually between 2003 and 2012.

Mantega also said that investment growth is exceeding the Gross Domestic Product (GDP), the sum of all wealth produced in the country. According to him, the domestic market is also strong, unlike other countries experiencing a crisis. He noted that public debt has been on a downward trajectory so far.

"We have consolidated fiscal and financial stability, with inflation under control. But we are living in the wake of the global economic crisis," Mantega assessed.

According to Guido Mantega's analysis, although the United States economy has shown signs of recovery, Europe continues to face problems. Economic growth in emerging countries has also slowed. Another important factor, he noted, is China, which is showing lower growth than it had been experiencing.

"The forecast is that China will continue to slow down. Therefore, this decline in the Chinese economy and others creates a context of a weak economy, with weak growth and an inability to meet needs. This means that exporting countries, such as Brazil, are competing for available markets, intensifying international competition."

The minister observed that recent statements from the Federal Reserve (Fed), the central bank of the United States, indicate a reduction in the monetary stimulus it had been providing. "The Fed, which had been injecting trillions of dollars, signaled a change in its stance: as a result, US Treasury bonds have become more valuable, bringing resources back into the American economy [which has become more attractive]."

With the change, Mantega reported, and interest rates signaling improvement in the US, there was an outflow of capital from around the world to the US economy. "This affects the exchange rate. We have an appreciation of the dollar and a fall in the currencies of other countries. This also affects the stock markets, which have been falling in recent weeks. This situation causes the turbulence that continues to this day."

Even in the face of this scenario, Mantega cited – as a counterpoint – the optimistic forecasts of the Brazil-United States Chamber of Commerce. According to the Finance Minister, the organization released research indicating that investors from the United States are interested in investing heavily in Brazil in the coming years.

With information from Agência Câmara and Agência Brasil.