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Brazil’s finance minister to support budget cuts to improve investors’ confidence

Brazil’s finance minister to support budget cuts to improve investors’ confidence

BRASILIA: Brazil’s government must make difficult budget cuts to improve investor confidence and restore economic growth, new Finance Minister Joaquim Levy said.

At his swearing-in ceremony in Brasilia, former treasury chief Levy said the fiscal adjustments would require the participation of society as a whole and would involve spending cuts and possible tax hikes.

“Fiscal balance is indispensable in order to continue granting opportunities to our people,” Levy said. He said that Brazil would see benefits such as greater business confidence, better-developed credit markets, higher levels of entrepreneurship and greater foreign investment.

Levy addressed reporters on the day Brazil posted its first annual trade deficit in 14 years, with imports outstripping exports by US$3.9 billion.Brazil now faces a fifth straight year of low growth after a peak of 7.5 percent in 2010. Demand is low and inflation is high — in November of last year it broke through a government ceiling of 6.56 percent. Levy must restore confidence already sagging in the wake of a kickbacks scandal at state oil firm Petrobras.

He insisted he was optimistic.In the coming four years, one way or another our economy will be transformed,” Levy said, adding that his policies would help attract private investment.

Levy named his policymaking team at the same event, tapping former finance ministry official Marcelo Barbosa Saintive to replace Arno Augustin as treasury secretary.