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Brazil to partially withdraw stimulus in 2014
December 14, 2013, 5:55 am

Mantega asserted the economy was on the path to recovery that should continue in 2014 [Getty Images]

Mantega asserted the economy was on the path to recovery that should continue in 2014 [Getty Images]

Brazilian Finance Minister Guido Mantega has said that Brazil will in 2014 withdraw part of the stimulus that helped boost investments but also hurt public finances this year.

He asserted the economy was on the path to recovery that should continue in 2014.

Mantega also announced Brazil will raise interest rates on some state-subsidized credit lines in 2014.

Interest rates on loans for the purchase of capital goods and trucks will climb to 6 per cent per year, from 4 per cent, while a special credit line for exports will climb to 8 per cent from 5.5 per cent.

Brazil’s benchmark lending rate is currently at 10 per cent after six consecutive increases this year.

Mantega had already announced that the credit line program would be extended into 2014 with some adjustments.

The Finance Minister has however said the international crisis has weakened the recovery prospects  for Brazil.

“This means that the Brazilian economy is growing with two crippled legs: on one hand, consumer finance, which is scarce, and on the other hand, the international crisis that robs us of a part of our growth potential,” said Mantega.

He had earlier claimed that with over $370 billion in international reserves, Brazil is very well prepared to weather any market instability.

Brazil had lead a chorus of criticism from emerging markets about the incoherence in spelling out the US Federal Reserve’s decision to taper its stimulus program.

“If they announce: ‘we are going to cut it by $10 billion a month; instead of $85 billion it will be $75 billion,’ such a decision would clearly have no effect” on markets,” Mantega had said.

With inputs from Agencies

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