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Brazil to Defend Economy at IMFC: Daily

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazilian Finance Minister Guido Mantega is set to defend the use of unconventional monetary policies by emerging economies, including Brazil, to counteract the damaging effects of the global economic crisis, in a speech to the International Monetary and Financial Committee (IMFC) on Saturday at the spring meeting of the International Monetary Fund (IMF) and the World Bank.

Finance Minister Guido Mantega, Brazil News
Finance Minister Guido Mantega will address the IMFC and defend Brazil’s monetary policies, photo by Marcelo Camargo/ABr.

According to reports, Mantega will tell the IMFC – the political arm of the IMF – that it is “unrealistic and undemocratic” to expect emerging countries to resort to “traditional policies” to deal with knock-on effects of the expansionist policies – including quantitative easing – implemented by the world’s major central banks, particularly those of the U.S., UK and the EU.

Brazil’s finance minister will be representing a bloc of eleven countries, including Ecuador, Nicaragua and Panama.

According to O Globo newspaper, which has seen a preview of the Finance Minister’s speech, Mantega will say that “traditional responses to excessive capital flows, such as tightening of fiscal policy, lowering interest rates and allowing the appreciation of the exchange rate, are usual expensive or inappropriate.”

Mantega will reportedly also defend the right to use measures such as “capital controls,” which he says the IMF only “approaches reluctantly” despite the fact that the G20 has seen little success in reinvigorating the global economy and congratulate Japan over its recent “bold” economic plan.

On Friday Christine Lagarde, Managing Director of the IMF, said she was concerned at how the world’s major economies were recovering at wildly varying speeds and recommended a “personalized” yet “synchronized” approach for each country at this “critical moment.”

Read more (in Portuguese).

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