October 10, 2014 / 5:59 PM / in 4 years

Brazil's Neves would improve ties with United States: adviser

WASHINGTON (Reuters) - Brazilian presidential challenger Aecio Neves would seek to repair ties with the United States and finalize a long-delayed free-trade agreement with the European Union if he is elected in an Oct. 26 runoff, his top economic adviser said on Friday.

Brazil's Social Democratic Party (PSDB) presidential candidate Aecio Neves attends a news conference in Rio de Janeiro October 9, 2014. REUTERS/Ricardo Moraes

Neves, a centrist favored by the business community who has vowed to reinvigorate Brazil’s struggling economy, is running neck-and-neck with leftist President Dilma Rousseff ahead of the vote, recent polls showed.

“We are keen to move back to a broader, more open approach to foreign policy,” Arminio Fraga, a former Brazilian central bank chief, said in a teleconference with investors on the sidelines of the International Monetary Fund and World Bank meetings Washington.

“I am sure we will be getting much closer to the U.S. and will try to wrap up negotiations with the European Union,” he added.

The U.S.-educated fund manager is Neves’ pick to be the next finance minister if the Brazilian Social Democracy Party leader wins the presidency.

Relations between the United States and Brazil were strained last year by revelations the U.S. National Security Agency spied on Rousseff with secret Internet surveillance programs made known in documents leaked by former NSA analyst Edward Snowden.

Tensions between the Americas’ two largest economies started to ease recently after a series of diplomatic accords that included the settlement of a decade-old trade dispute over cotton subsidies.

Meanwhile, Brazil and its Mercosur trade partners- Argentina, Uruguay and Paraguay - are stuck in talks with the EU to ink a free-trade deal in the works for nearly two decades. Venezuela joined Mercosur in 2012, but it is not a party to the talks.

The Brazilian economy tumbled into a recession this year and the inflation rate hit its highest level in nearly three years in September, rising above the central bank’s official target of 4.5 percent, with a tolerance range of 2 percentage points.

On Tuesday, the International Monetary Fund cut its 2015 growth forecast for Brazil by 0.6 percentage point to 1.4 percent and lowered its 2014 growth forecast to 0.3 percent from 1.3 percent.

Brazilian Finance Minister Guido Mantega accused the IMF of overplaying the country’s diminished economic prospects.

“Recent IMF assessments on Brazil have been contradictory,” Mantega said in a statement prepared for delivery to the IMF’s steering committee on Saturday.

“Some Fund documents attribute the slowdown in growth to internal factors,” Mantega said. “These assessments contrast with other recent papers published by the institution ... that concluded that external factors have been responsible for 60 percent of the growth slowdown in Brazil.”

“Perhaps the IMF needs to consider more carefully its assessments of national economies before publishing them,” Mantega said.

Reporting by Marina Lopes; Additional reporting by Tim Ahmann; Editing by Alonso Soto and Paul Simao

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