During an event in São Paulo, Ilan Goldfajn explained how the changes could lead Brazil to a better economic scenario
Central Bank President Ilan Goldfajn said that the government's economic policy changed the direction of the country and that the reforms implemented in recent months have already shown positive results. According to him, continuity in this direction, especially with the approval of the pension reform, will be important for the fall of interest and inflation.
His speech came during the 8th edition of Itaú Macro Vision, in São Paulo. For the BC president, the various reforms and adjustments in the economy have increased confidence and reduced the risk perception of the Brazilian economy. He cited the fall in Brazil as an example of a change in the way the country came to be seen by foreign investors.
This indicator, which is measured by Credit Swap Default (CDS) contracts, a kind of insurance against defaults, showed a "very significant" improvement. It dropped from approximately 500 points in early 2016 to less than half that figure. "This shows greater confidence of foreign investors in the country's solvency capacity, as a result of the reforms and the focus on fighting inflation and the recovery of economic activity," he noted.
Ilan also recalled that the tax reform under way, especially after the approval of the public spending ceiling, has been favorable. He categorized these changes as decisive for the good future performance of the Brazilian economy.
"The work of the government and the Central Bank in recent months has been effective in containing inflation and anchoring expectations. Inflation fell from 10.7% in December 2015 to 4.6% in March 2017, "the BC president said.
Goldfajn also explained that the fall in basic interest rates (Selic) along with structural measures should contribute to the fall in the cost of credit. "The structural and sustainable reduction of the cost of credit involves a set of microeconomic reforms to increase the efficiency and productivity of the economy," he noted.
Source: Portal Brasil, with information from the Central Bank