By Luciana Lopez and Daniel Bases
NEW YORK Feb 26 Brazilian Finance Minister
Guido Mantega on Tuesday expressed confidence that the country's
pace of inflation will remain within targets in full-year 2013,
and he promoted the government's efforts to spur infrastructure
investments to help lift a flagging economy.
"We have met and exceeded our inflation goals for last year
and the same is in store for 2013," Mantega told investors in
Brazil's central bank targets inflation at 4.5 percent, plus
or minus 2 percentage points. While 12-month inflation has
stayed just below the top of that range, the bank has struggled
to bring the rate closer to 4.5 percent.
The government of President Dilma Rousseff is seeking up to
$235 billion in infrastructure investments.
Mantega said he expects investors to get 10 percent or more
per year return on their money from infrastructure projects
running the gamut of oil and gas to electricity and
The economy has slowed from a breakneck pace, putting at
risk the hard-fought advances in lifting the per capita income
levels of Latin America's biggest country toward developed
Brazil's 2012 fourth-quarter gross domestic product is
expected to have risen 1.6 percent year-on-year, which would
make it the strongest period of last year. Such growth, however,
wouldn't come close to matching the 7.5 percent rate of 2010 or
the 2.7 percent rate of 2011.
Mantega noted that the rapid development had brought about
volatile exchange rates and forced the government to implement
capital controls such the financial transactions tax (IOF) on
While some of those taxes, which slowed the flow of
speculative cash coming into Brazil, have been removed, he said
there are no plans to eliminate all of them.
When asked if the government was considering removing the
IOF on fixed income for non-residents, Mantega replied: "No, not
for fixed income."
Brazil's currency, the real, lost nearly 10 percent against
the U.S. dollar last year, but since the start of 2013 it has
regained a little over 3 percent of its value, an added weapon
that is helping the government keep inflation from breaching the
central bank's target.
"Today we have a foreign exchange rate stabilized at a more
realistic level and with low volatility," Mantega said.
Economists still expect 2013 inflation to clock in at 5.69
percent, according to the latest central bank survey.
Brazilians have long memories of runaway prices in previous
decades, and the government has been careful to reassure voters
that price increases will not repeat that performance now.
"Controlling inflation is a priority," Mantega said.