DAVOS, Switzerland (Reuters) - Brazil is not concerned about its current account deficit which should have the benefit of weakening the real, Finance Minister Guido Mantega said on Friday.
He also said at the World Economic Forum that fiscal stimulus — in the form of tax cuts and tax breaks — would not be renewed.
“We are not concerned about it because we have strong reserves,” Mantega said. “This deficit will help the exchange rate because there might be a (market) devaluation of the real,” which would make exports more competitiveness, he said. The government came under heavy pressure from exporters last year to take action to prevent the real from strengthening further.
Data last week showed Brazil ran a current account deficit of $24.334 billion in 2009 compared to a $28.192 billion deficit in 2008, after surpluses over the previous five years.
“We don’t have the intention to renew the stimulus from tax cuts and breaks,” Mantega said. “We are going to go back to the original levels.”
Reporting by Krista Hughes, writing by Mike Peacock