On Wednesday (12/03), the Chief-Minister of the Civilian Household, Dilma Rousseff, participated in a public hearing at the Chamber with six committees, to draw a diagnosis on the crisis and on its impact on PAC works.

She said that the crisis caused, in emerging countries, a “brutal” drop in credit offer; export of capital (with the drop in the stock market and in profit remittance); currency devaluation, with the outflow of investors to U.S. Treasury Bonds; and deterioration at the current account balance. However, in a first moment, these mechanisms do not cause recession”, he declared.

Slowing down x recession
According to the minister, the main impact of the world crisis in emerging countries, such as Brazil, in the present, is the slowing-down of economic growth, while developed countries are already undergoing recession.

She believes the Growth Acceleration Program (PAC) will help Brazil overcome the effects of the financial crisis, since it is a “great instrument” for the maintenance of an anti-cyclic policy, which guarantees the investments in times of economic retraction after the assembling of reserves in times of economic growth.

Nineties: the government was part of the problem
According to Dilma, the situation in Brazil is currently better – even if compared to other emerging markets – since Brazil “has broken the vicious circle of the nineties”, when the government was obliged to recur to the International Monetary Fund (IMF), always when there were international crises, to recompose the financial-reserve levels, among other reasons.

At that time, “a crisis became a currency crisis, contaminated the Government’s Budget, generated a tax crisis, and, because the debt was indexed in dollars, increased the deficit in current account, and caused Brazil to break. The government, instead of being part of the solution, was part of the problem”, she said.

She added that, when Brazil recurred to FMI, the Fund required the reduction of investments and of consumption, and “rendered the scenario and the perspective of a future unfeasible” since there was a cutback in infrastructure investments. “When one does not systematically invest in infrastructure, something happens, such as the energy crisis and the abandonment of works”, she highlighted.

Credit restriction
Dilma Rousseff also said that the financial crisis should not cause the bankruptcy of Brazilian banks, as it happened to several international institutions, but there will be credit restriction. “The financial storm calmed down and there will not be any more banks filing for bankruptcy, such as Lehman Brothers, but credit is more rare and expensive”, affirmed the minister.

Stress in Petrobras
That credit restriction forced Petrobras to ask for a R$2-billion loan at Caixa Econômica Federal (Federal Savings Bank), according to the minister. As she was questioned by the deputies about the subject, Dilma Rousseff affirmed that the loan resulted from the problems the company had in raising funds abroad.

However, she denied that Petrobras has any financial problem, and criticized people who challenge its economic capacity. “It is impossible to suppose that Petrobras is bankrupt”, she declared. “Why should someone submit such a respectable company to such a stress? This conflict has no technical basis” she added.

The loan would aim at strengthening the working capital of the company. For the minister, Petrobras will be “the first” to have access to those resources, as soon as the credit lines abroad are open.

Report - Rodrigo Bittar
Editing - Newton Araújo Jr.
Translation - Positive