The euphoria with Brazil has ended and foreign investors are showing concern with the constant policy changes and their imposition on private companies. These are some of the rare comments that former Central Bank President Henrique Meirelles has made about Dilma’s government. “I prefer to believe that these constant interventions are only reactions to the crisis and that the previous trend will be back to normal,” he says. Meirelles is now Chairman of J&F Group (owner of food company JBS), Chairman of the Brazil office of Lazard, and board member of regional airline Azul.
Here is an excerpt from an interview he’s given to media site Estadao:
Estadao: Many observe that foreign investors are beginning to manifest their discomfort with Brazil government’s interventions in the private sector. Do you agree?
Meirelles: The level of concern by foreign investors has increased substantially. Our economic situation has changed and investors all over the world are now more cautious. There is no doubt that the euphoria with Brazil and other BRIC countries no longer exists today. Somehow, I think that’s healthy.
Estadao: But have you noticed investors’ concerns on the government’s interference in the business environment?
Meirelles: Yes. Actually, I do get asked a lot about it in my lectures to international investors. I try to get them to pay attention to the basic issues in Brazil. The country offers solid corporate structure and practices a market-driven economy. There may be some specific issues, but only time will tell as to whether these interventions are only reactions to the crisis or really a cyclical trend for the future. I prefer to believe that they are reactions to the crisis and that the previous trend will get back to normal.
Estadao: The first quarter GDP growth was only 0.2%. Why Brazil is growing so little?
Meirelles: We are living a period of major global economic downturn. And there is no doubt that it has impacted the Brazilian economy. The government is adopting a series of counter-measures and all we can do is wait and see if these developments will make the economy react in the coming months. We are growing well below potential, and there is certainly room for more growth without generating further imbalances.
Estadao: Some analysts believe that the Central Bank has lost autonomy in Dilma’s government. Do you agree?
Meirelles: There is a policy that says I can not comment on my successors until after two years after leaving the Central Bank. The relationship between the government and the banks is hot because of the interest rates. They were criticized by President Dilma and pressured by the Minister Guido Mantega.