Brazil is responding well to the crisis, says Armínio Fraga

Brazil needs to stay calm during the international financial crisis, although it is unlikely that the country will experience major problems, according to former president of the Central Bank Armínio Fraga, who attended a meeting of the Committee on Economic Affairs on Thursday (13).
Fraga participated in a permanent forum promoted by the committee to discuss the economic crisis. An economist, Fraga presided over the Central Bank between March 4th 1999 and January 1st 2003, during the second term of president Fernando Henrique Cardoso.
- Brazil will face turbulence, since global demand is lowering and commodities prices are plunging. But we have a capitalized financial system, although in the last years we have seen some excessiveness, such as in loans to finance cars and the concession of consigned credit. We should open our eyes to that, but there is no reason to think that we are going to experience the same problems of the rest of the world – said Fraga.
In his opinion, the Central Bank is responding appropriately to the world crisis. The former president of the institution thinks that the government should try to ease the impact of the crisis by acting on a "day-to-day" basis, confronting problems as they appear. The economist also warned that, even with the government's help, the growth rate of the Brazilian economy is no longer sustainable, and will probably be lower than expected.

Revenue should also decline during the next year in all three spheres of government, believes Fraga, since the world growth rate in 2009 will be no higher than 1%. Notwithstanding, the former president of the Central Bank sees a positive aspect in the crisis: the possibility of reducing interest rates as soon as the economic situation gets better, "as long as the government stays calm".(Agência Senado)