Brazil Threatens Foreign Capital Tax: Daily

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Finance Minister Guido Mantega has chided Western central banks over money-printing and other stimulus measures, and warned that Brazil could impose taxes on speculative foreign capital to avoid its currency strengthening. Mantega reiterated his stance that Brazil would take “all necessary steps,” including “those adopted in the past” to prevent Brazil’s real from appreciating unduly.

Brazil Finance Minister Guido Mantega, Brazil News

Brazil Finance Minister Guido Mantega is a fierce opponent of Western countries’ quantitative easing programs, photo by Marcelo Camargo/ABr.

One of the options was to introduce short-term capital taxes, Mantega said in London where he was attending an economic conference.

He also said there was further room to cut the country’s key interest rate, the Selic, despite the fact that it is already at a historic low of 7.5 percent.

The news comes a day after the Finance Minister criticized Western countries economic approaches, in particular the U.S. over its quantitative easing program and devaluation of the dollar to benefit exports.

Responding to criticism that Brazil was being overly “protectionist,” Mantega said it was “absurd” to suggest this, as many other countries, such as the U.S., the UK, India and Argentina, were taking far more protectionist steps.

He said round of asset-buying, particularly in the U.S. and in Japan, would set off further “currency wars” and lead to even greater protectionism.

Mantega said Brazil would win further foreign investment through global confidence in its economy – and said that despite the current slowdown in Brazil’s economy, 2013 would be see stronger growth of four percent or more.

However, it was recently revealed that a forty-percent drop in foreign investments had hit Brazil earlier this year, wiping billions of dollars of the country’s main Bovespa stock exchange.

Back in 2009, investors were taken aback when Brazil imposed taxes on some foreign investments, which it argued were speculative and harmful to the economy.

Read more (in Portuguese).

* The Rio Times Daily Update is offered to help keep you up-to-date with important news as it happens.

2 Responses to "Brazil Threatens Foreign Capital Tax: Daily"

  1. Pingback: Rousseff Speaks of Protectionism at the UN | The Rio Times | Brazil News

  2. Pingback: Brazil and President Dilma Rousseff's 2013 Foreign Policy Plans | The Rio Times | Brazil News

Leave a Reply

Your email address will not be published.