Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Brazil: Policies and Prospects August 2002 1 Background: Main Structural Changes 1. Inflation Stabilization 2. Financial Stability 3. Fiscal Responsibility 4. Moving to a Floating Foreign Exchange Rate 5. Productivity and Others 2 Jul-02 Jan-02 Jul-01 Jan-01 Jul-00 Jan-00 Jul-99 Jan-99 Jul-98 Jan-98 Jul-97 Jan-97 Jul-96 Jan-96 Jul-95 10 Jan-95 Jul-94 50 Jan-94 % IPCA Monthly Inflation 47.43 45 40 35 30 25 20 15 Real Plan 5 0 -5 3 1.0 Jul-89 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 IPC-FIPE – Real Exchange Rate 3.6 Average: Jan/88 to Jul/02 2.0 Average: IPC-FIPE Prices as of July 2002 (R$/US$) 3.43 3.4 3.2 3.0 2.8 2.6 2.4 2.2 1.95 1.8 1.6 1.4 1.2 4 Fiscal Adjustment 7% 6% Consolidated Primary Surplus 12-month % of GDP 5% 4% 3% 2% 1% 0% -1% -2% Jul 94 Mar 95 Nov 95 Jul 96 Mar 97 Nov 97 Aug 98 Mar 99 Nov 99 Jul 00 Mar 01 Nov 01 5 Public Sector Borrowing Requirements Accumulated in 12 months 5.0 4.2 4.0 3.6 3.8 4.0 4.2 4.0 3.5 3.7 3.1 3.0 3.0 2.8 Dec-02 Oct-02 Aug-02 Jun-02 Apr-02 Feb-02 Dec-01 Oct-01 2.0 Aug-01 2.5 Jun-01 % of GDP 4.5 6 Net Foreign Direct Investment US$ billion 32.8 28.9 28.6 6.7 6.1 8.8 22.5 Net FDI - privatizations 19.0 Privatizations 1.1 5.2 26.1 10.8 22.7 19.8 2.3 13.7 4.4 1.0 1.1 2.1 1.3 2.1 1990 1991 1992 1993 1994 1995 21.4 8.4 1996 1997 1998 1999 2000 2001 7 Industrial Productivity and ULC 180 Industrial Productivity /1 160 140 120 100 ULC in US$ /2 80 /1 1992=100/Seasonally adjusted series /2 June 1994=100/Nominal ULC/12-month moving average Jun-02 Jan-02 Jan-01 Jan-00 Jan-99 Jan-98 Jan-97 Jan-96 Jan-95 Jan-94 Jan-93 40 Jan-92 60 8 Illiteracy Rate Above 15 years old (%) 21.9 18.3 16.9 16.2 15.6 14.7 13.8 Source: IPEA, based on PNAD, IBGE 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 13.3 9 Children in School 7-14 year-old (%) 97.0 94.8 95.7 93.0 90.2 91.3 88.7 87.0 Source: IPEA, based on PNAD, IBGE 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 80.5 10 II. 2001 and 2002 Period 11 Exchange Rate 3.80 3.60 3.40 3.20 3.00 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 1.00 September 11th Election Concerns 3.09 Inflation Targeting World Economic Slowdown Change in the Exchange Rate Regime Energy Crisis Technology Stocks Crisis Jan-98 Mar-98 May-98 Jul-98 Sep-98 Nov-98 Jan-99 Mar-99 May-99 Jul-99 Sep-99 Nov-99 Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 R$/US$ Evolution of the Nominal Exchange Rate Daily figures updated up to August 20th. 2002 12 III. Balance of Payments 13 IMF Agreement New Stand-By Arrangement - US$ 30 billion 2002: US$ 6 billion NIR floor: US$ 5 billion Primary surplus: 3.75% of GDP for 2003 and no less than that level for 2004 and 2005 WB + IDB = US$ 7 billion 14 Trade Balance - US$ billion 10 9.0 7.0 8 6 4 2.6 2 0 -2 -1.3 -0.7 -4 -6 -8 -6.6 1998 * BC forecasts 1999 2000 2001 2002* 2003* 15 Current Account Deficit US$ billion 40 33.4 35 25.3 30 24.2 23.2 25 17.0 15.4 2002* 2003* 20 15 10 5 0 1998 1999 2000 2001 * BC forecasts 16 Foreign Direct Investment US$ billion 32.8 35 28.9 28.6 30 22.5 25 20 16.5 17.0 2002* 2003* 15 10 5 0 1998 1999 2000 2001 * BC forecasts 17 External Financing Requirements US$ billion 6 4.6 4 0.8 2 0.5 0 -1.6 -2 -4 -3.2 -6 -8 -8.6 -10 1998 1999 2000 2001 2002* 2003* * BC forecasts External financing requirements = current account deficit - net foreign direct investments (includes intercompany loans). 18 Changes in International Reserves US$ million I - Reserve position (end of the previous period: 1. Net Purchases (+)/sales (-) of Banco Central 2. Banco Central's foreign operations Disbursements Bonds IMF Multilateral (IBRD/IDB) Amortizations Bonds, MYDFA and Paris Club IMF Interest Expenditure Reserve interest earnings Other II - Total Banco Central operations (1+2) III - Reserve position (end of the month) (-) Loans from IMF (-) Sovereign Buy Back (exceeding value) (-) Difference of parity IV - Net reserves position (IMF concept) 2001 2002 Dec Jan-Jul Aug-Dec Year Year 37 234 -950 -417 0 0 35 866 -2 605 5 798 14 762 3 940 9 972 850 -6 778 -2 393 -4 384 -2 211 -3 090 879 24 3 193 39 060 14 453 1 457 -404 23 553 39 060 -5 134 3 816 6 600 0 6 000 600 -1 092 -915 -177 -1 691 -2 358 667 0 -1 318 37 742 20 276 2 385 -404 15 485 35 866 -7 739 9 615 21 362 3 940 15 972 1 450 -7 870 -3 309 -4 561 -3 902 -5 448 1 546 24 1 875 37 742 20 276 2 385 -404 15 485 37 742 0 -13 984 6 650 4 000 0 2 650 -16 074 -4 582 -11 492 -4 560 -5 960 1 400 0 -13 984 23 758 8 784 1 957 -269 13 286 -156 -156 100 -50 150 -361 -1 367 35 866 8 313 0 -284 27 837 2003 19 BoP: Assumptions Trade Balance Exports % variation Imports % variation Net foreign direct investment Equity capital FDI conversions Intercompany loans Medium and Long Term Loans (rollover rate) Securities Loans Short-term and others Short-term instruments, liabilities (net) Short-term loans (net) Short-term credit lines (net) Of which: Banco Central do Brasil Other 1/ Brazilian investments abroad Net direct investment abroad Portfolio investments (net) Other investments (net) 2/ Of which: bank deposits 2002 Jan-Jul 3,804 31,275 -7.7% 27,471 -18.9% 10,546 5,640 5,665 -759 Aug-Dec 3,196 23,325 -4.1% 20,129 -7.3% 5,954 2,415 3,539 0 Year 7,000 54,600 -6.2% 47,600 -14.4% 16,500 8,055 9,204 -759 43% 60% 861 -718 140 3,968 0 -2,529 -1,746 -1,686 -196 136 2,645 57% 66% 1,452 94 -500 2,253 2,000 -395 -2,098 -452 -204 -1,442 1,500 44% 62% 2,313 -625 -360 6,221 2,000 -2,924 -3,844 -2,138 -400 -1,306 4,145 1/ Includes derivatives (liabilities operations), other short-term liabilities and errors and omissions. 2/ Includes derivatives (assets operations). US$ million 2003 Year 9,000 59,000 8.1% 50,000 5.0% 17,000 13,500 3,500 0 80% 100% 100 0 0 0 0 100 -5,855 -1,400 600 -5,055 -1,355 20 External Debt - Amortizations and Interest Maturities 1/ US$ million 2002 Interest Non-financial public sector Central government (affects reserves) Private sector 2/ Amortizations Non-financial public sector Central government (affects reserves) Private sector 2/ Total Non-financial public sector Central government (affects reserves) Private sector 2/ 2003 Jan-Jul Aug-Dec Year Year 8 877 8 183 17 059 17 050 4 260 3 208 3 219 2 358 7 469 5 577 8 001 5 960 4 616 4 975 9 591 9 049 17 536 11 704 29 240 28 004 4 024 2 507 2 394 915 6 531 3 309 8 869 4 582 13 512 9 197 22 709 19 135 26 413 19 887 46 299 45 054 8 285 5 715 14 000 16 870 5 613 3 273 8 886 10 541 18 128 14 172 32 299 28 184 1/ Forecast based on debt position in March, 2002. 2/ Includes financial public sector. 21 Total External Debt 240 223.79 220 225.61 216.92 209.90 191.62 200 179.94 US$ billion 180 160 140 120 145.73 148.30 135.95 159.26 123.44 123.91 100 80 60 40 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Does not include intercompany loans 22 IV. Credit Lines 23 Credit Lines – Bank to Bank US$ billion Jan 2001 Jul 2001 Jan 2002 Jul 2002 Aug 2002* Trade 14.1 15.7 13.7 12.2 11.8 Other 7.7 6.2 5.6 5.2 5.0 Total 21.8 21.9 19.3 17.4 16.8 * Until 16th. Bank to Bank data informed by 40 Brazilian banks. 24 16 Aug-02 Jul-02 Jun-02 May-02 Apr-02 Mar-02 Feb-02 Jan-02 Dec-01 Nov-01 US$ billion Oct-01 Sep-01 Aug-01 Jul-01 Jun-01 May-01 Apr-01 Mar-01 Feb-01 Jan-01 Credit Lines – Bank to Bank Total 23 22 21 20 19 18 17 25 *Until the 21st. Total Exports Exp. Financ./Total Exports 6 60 5 50 4 40 3 30 2 20 1 10 0 0 Export Financing / Total Exports (%) Aug –02* Jul-02 Jun-02 May-02 Apr-02 Mar-02 Feb-02 Jan-02 Dec-01 Nov-01 Oct-01 Sep-01 Aug-01 Jul-01 Jun-01 Total Exports and Exports Financing (US$ billion) Exports: Total and Export Financing Export Financing 26 V. Fiscal Sustainability 27 Net Public Sector Debt Baseline Scenario 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Inflation GDP deflator (average) 7.59 4.94 3.87 3.63 3.50 3.50 3.50 3.50 3.50 3.50 Inflation GDP deflator (Dec-Dec) 5.89 4.00 3.75 3.50 3.50 3.50 3.50 3.50 3.50 3.50 GDP real growth 1.30 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 Interest rate 1/ 17.59 13.36 13.09 12.82 12.82 12.82 12.82 12.82 12.82 12.82 Real interest rate 11.05 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 Nominal currency depreciation 22.87 2.46 2.22 1.97 1.97 1.97 1.97 1.97 1.97 1.97 Primary (% of GDP) -3.75 -3.75 -3.75 -3.75 -3.75 -3.75 -3.75 -3.75 -3.75 -3.75 1.61 0.65 0.75 0.75 0.75 0.75 0.00 0.00 0.00 0.00 "Skeletons" 2/ Net debt (% of GDP) 58.88 58.27 57.54 56.77 55.94 55.07 53.42 51.69 49.86 47.95 1/ Implicit internal net debt interest rate. 2/ Net of the privatization proceeds (% of GDP). 28 Net Public Sector Debt - % of GDP Baseline Scenario 60 58.9 58.3 57.5 58 56.8 55.9 56 55.1 54 53.4 52 51.7 50 49.9 48 46 47.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 29