Brazil is a ‘safe haven for investors’ in the war, says Guedes adviser

The Economy Ministry said on Friday (4) that the war in Ukraine will cause global resources to migrate from certain regions to where there is more protection. Therefore, the ministry argues that this is the time for Brazil to show itself as a safe haven for international investments.

Adolfo Sachsida, head of the Special Advisory for Strategic Affairs at the Ministry of Economy, said that Brazil should present to capital holders at this time factors of attraction such as the advance in the agenda of reforms, privatizations and concessions.

“Conflicts and wars are not beneficial to anyone, but there are factors that we can control and others that we cannot,” he said. “What is in the control of the Brazilian government is, given the international scenario, to show that Brazil is a safe haven for investments,” she said.

The ministry considers that, for this objective to be achieved, it is essential to approve the PL (bill) of the New Guarantee Framework, the MP (Provisional Measure) of public records and the PL of incentivized debentures. In addition, to obtain legislative approval for the privatization of Correios and to privatize Eletrobras in the first half of the year.

Sachsida says that Brazil’s position, against the war and aligned with democratic countries, is also a measure that favors.

“For example, some countries abstained from voting at the UN [Organização das Nações Unidas]. Brazil did not abstain. Three times we voted with Western democracies. This shows that Brazilian diplomacy is aligned with democracies,” he said.

The movement in global investment flows is also being monitored by the market. The provider of global stock indices MSCI announced on Wednesday (2) that the Russian market will no longer be part of the benchmark indices dedicated to emerging markets and, according to Itaú BBA, the decision could result in approximately R$7 billion of external resources for Brazil.

Sachsida’s comments were made during an interview about the 2021 GDP result. The Ministry of Economy celebrated last year’s 4.6% growth, but said it was necessary to monitor now what it called an adverse international scenario.

One of the main effects of the war is the increase in the price of oil and an even greater pressure on inflation. This has accelerated the search of the Brazilian political class for measures to contain fuel prices.

As shown by sheet last week, the economic team fears that the war will generate pressure for “heroic measures” to hold prices – but which, in practice, do not work. This week, the column Mônica Bergamo reported that ministers increased pressure for Guedes to accelerate measures that could contain the values ​​in the bombs.

Sachsida said that the Ministry of Economy is against measures for fuels that generate instability or fear about the balance of public accounts because they generate fears among investors. In his view, this would make the Brazil risk increase and the real depreciate – which would make prices rise.

“The Ministry of Economy works in favor of Brazil. Our position is not ideological. It is anchored in solid economic theory,” he said. “When we stand against a certain measure, it’s not because we are against whoever is proposing it or because of ideology,” she said.

“What happens is that certain proposals generate adverse macroeconomic effects. And, with these adverse macroeconomic effects, instead of generating a positive result, they generate a negative result”, he said.

“You start with a measure to reduce the price of fuel, but it generates an increase in the price of fuel. So measures of this type seem wrong to us because they will have the opposite result to what they wanted”, he said.

The secretary claims to understand “the demand of Congress and the Brazilian population” and that it is legitimate, but that it is up to the ministry to show that certain measures will generate the opposite result to what was expected.

“If we want to reduce fuel prices, we need to take structural measures that lead to the reduction. For example, all measures that show that Brazil is a safe haven for investment will attract international investment. With that, the real will appreciate. real appreciation, the price of fuel drops”, he said.