Former president of the Central Bank highlights deteriorating economic model and says that credit will be more expensive if Brazil lost the investment grade

Former president of the Central Bank highlights deteriorating economic model and says that credit will be more expensive if Brazil lost the investment grade

By Lara Rizerio | 16:00 | 10/17/2013

SAO PAULO - During a lecture called " How to make Brazil grow wide and sustainable " that made the 8th International Seminar Acrefi ( National Association of Credit, Financing and Investment ) , former President of the Central Bank , Affonso Celso Pastore showed concerns about the growth model of the Brazilian economy .

Pastore said the setback in the process of economic reform that have occurred in recent decades through tax reforms and privatizations evaluating that after this process has remained under Lula , has deteriorated in the current government of President Dilma Rousseff . " These reforms , in which Brazil could register a breath in the economic field , suddenly disappeared off the map."

As noted economist , Brazil does not register strong growth has been funding

through a current account deficit , which is a very worrying trend . Still associated to the lower frame bonanza with respect to commodity prices to the deceleration of growth in China , the outlook for the Brazilian economy are nothing positive .

Finally , complete the table fall in real interest rates , which since 2011 has been recording low , low " courageous " , according to the economist , but not in the positive sense , since it demonstrates government interference . However , points , lower the real interest rate will not awaken the "animal spirits markets " to make more investments .

Regarding fiscal policy , Pastore said she is quite expansive even after

Cooling of the 2008 crisis , which would not be recommended.

Moreover, the exemptions were made inefficiently and the fact of his own BNDES ( Banco Nacional de Desenvolvimento Economico e Social ) to determine who are the " national champions " are policies that demonstrate some of the

government's problems .

And , evaluates , lending by BNDES has grown quite strong, which causes problems for the government .

This is not because of the credit portfolio of the development bank , but for the fact that the

government can not recoup their investment by charging loans TJLP Interest Rate ( Long Term ) by 5% per year, while the Selic rate is 9 % per year.

Donwgrade of Brazil

Amidst this scenario, " can only lead to downgrade the sovereign credit rating of Brazil ," he said .

"Brazil is not leaving to grow by chance , he entered a harmful ideological route that did not exist before the Lula government. Lula's government has not messed with the economy , was 100 % and 0 % ideological pragmatism . Currently , the sign is reversed . "

And if Brazil lost the investment grade , the Brazilian investor is borrowing at

abroad will have to pay interest rates well above the current . The speech of former Central Bank president occurs in an environment in which the rating agencies Moody's and Standard & Poor's changed the rating outlook to negative the country .

And said that we are experiencing a new economic cycle now , with Europe showing signs of

improves and the United States resuming growth trajectory , since it expects capital flows back to the market norte-americano.10/25/13 InfoMoney ::

Pastore alert for high debt real estate in Brazil , " will give nonsense "