Brasília, September 5, 2003 (Agência Brasil - ABr) - The high level of the Brazil risk premium rate, compared with other emerging countries, "is one of the biggest obstacles to the development of the economy; and our path to the future passes through a reduction in this rate," which was quoted at 660 points by JP Morgan at the close of business yesterday (4).

This observation was made by the president of the Central Bank, Henrique Meirelles, who spoke last night in Salvador (BA) at the opening of a meeting of the National Association of Credit, Finance, and Investment Institutions (Acrefi).

Brazil, Meirelles said, is considered high risk as a result of unorthodox errors commited in the past, such as exchange controls, price controls, and "tablitas" (tables of predetermined daily devaluations, adopted as part of the Cruzado Plan, 1986-87), errors "we shall not repeat." The president of the BC said that he is optimistic, nonetheless, over the prospects for a reduction in the Brazil risk premium, as a result of the "adoption of consistent fiscal and monetary policies that guarantee the permanent sustainability of domestic and foreign accounts."

At the height of the economic crisis, in the second half of last year, he recalled, the Brazil risk premium rose as high as 2,400 points. Today, after eight months of Lula's Administration, the determined application of fiscal and monetary controls has pulled the level of the risk premium to below 700 points.

According to Meirelles, this opens the way to reductions in financial costs, which means credit to stimulate investments. The process of adjusting public finances, he added, will make it possible for the public sector's current spending requirements to absorb a smaller proportion of private savings, which should generate an "enormous impulse" for the productive sector of the economy. (DAS)