Brazils financial stability and good long-term
economic prospects are key to Rio de Janeiro being made host of
the 2016 Olympics, Central Bank president Henrique Meirelles
Brazil has weathered the global economic crisis with
comparative success, producing a self-confidence exemplified by
its vocal stance in the G20 and now by landing the
Meirelles greeted the 2016 win after flying in to Istanbul
from Copenhagen, where he had accompanied president Luiz Inacio
Lula de Silva to hear the announcement of the International
Olympic Committees decision.
He had previously travelled to Lausanne to make a
presentation on Brazils economic and financial record
before the IOC.
Meirelles said: Why would the president of the
Central Bank go to Copenhagen? Because we had to demonstrate
our capacity to deliver. The choice of Rio had a
symbolic and practical effect.
Brazils finance minister Guido Mantega said the
Olympics may provide a further boost of approximately 1
percentage point per year to GDP. Extra investment into the
economy from private and public sources may exceed $10
Brazilian leaders also claim significant progress in the
countrys role in global governance at the G20, which is
progressively taking precedence over the G7.
Brazils leadership is being asserted because our
political importance has increased, Dilma Rousseff, the
presidential civil chief of staff and Lulas political
heir apparent, said at a recent press briefing.
Brazil is looking forward to 3.5% GDP growth next year after
emerging from a short recession this year, according to the
IMF. The Fund has forecast negative growth of 0.7% for
Rousseff said: Some market forecasts point to 5%
GDP growth in 2010. This is not only the official government
forecast. We are going to experience strong growth with a
special strength coming from our domestic
Private capital flows have poured back in the giant Latin
American economy. Santander is poised to complete an $8 billion
initial public offering of its Brazilian subsidiary this week,
which promises to be the largest of the year.
Brazil has also just completed a $1.25 billion bond issue
due in 2041 last week at a 5.8% yield, following Moodys
decision to grant Brazils sovereign investment grade
status (Baa3). As a result, Brazil now enjoys investment grade
according to the three main credit rating agencies.
Rousseff said that Moodys was the only agency
that had not rated Brazil at investment grade previously.
Why are we the only country to have been elevated to
investment grade just after the crisis? Because we showed a
great resistance during the crisis, we flexed muscles to resist
Meirelles said the resilience was largely due to
strong economic fundamentals. We are coming out of this
crisis in better conditions if we compare to other countries.
We have registered some relative [comparative]
Meanwhile, Meirelles said interest rates are rising in the
futures market, due rather to uncertainty on the outcome of the
October 2010 election than to an early reversal of Brazilian
The Central Bank of Brazil has cut interest rates on its
benchmark Selic bond by 500 basis points between January and
July to 8.75% per year, before putting them on hold.