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 has said.
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 Olympics.
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 billion.
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 2009.
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 market.
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 it.
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] gains.
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 monetary policy.
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.