Lana Cristina
Reporter - Agência Brasil

Brasília - There are indices that reflect a country's economic situation. One of the most popular, internationally, is the country risk premium, created in 1994 by the JP Morgan Bank, in the US, to guide clients as to the future of their investments. Yesterday (4), the Brazilian country risk premium fell to its lowest level ever: 301 points.

The country risk premium, which is used to measure the degree of uneasiness that exists in relation to 21 emerging countries, including Brazil, is based on a basket of titles negotiated in the major centers of the international financial market.

In the case of Brazil, the Brazilian foreign debt title known as the C-bond is the one most used to calculate the index. The market interprets high country risk premiums as indicative of a significant likelihood that a country will not honor its commitments, such as foreign debt payments. Investors thus shy away from countries with high country risk premiums.

There are other factors, however, that can be used to size up an economy's future, such as inflation controls, the fiscal surplus, the currency exchange system (in Brazil, it is a floating exchange at present), and the trade surplus.

In 2005, for example, Brazil achieved its best trade surplus ever. The difference between exports and imports amounted to US$ 44 billion, 33% more than in 2004.

Translation: David Silberstein