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KAI RYSSDAL: Brazilian President Lula da Silva said today he’s hopeful the latest round of global trade talks can still be saved. There’s been some concern what’s known as the Doha round might be DOA come the end of the year. Lula’s vote counts, because Brazil’s been leading a group of developing countries pressing the U.S. and Europe to change their trade policies — agriculture, specifically. And there’s some news today which leads one to believe Brazil might be taken even more seriously now. It used to be one of the world’s most indebted countries. But thanks to surging commodity prices and better fiscal management, Brazil’s now sitting on a pile of cash. And it’s looking for places to spend it. From the Americas Desk at WLRN in Miami, Marketplace’s Dan Grech reports.
DAN GRECH: To get a feel for how extraordinary Brazil’s turnaround has been, let’s rewind to 2002. Voters there elected a leftist union leader as president and the international markets freaked out. Investors yanked $60 billion out of Brazil, a flight of unprecedented proportions. Now, five years later, Brazil has paid off its international debt, its budget is balanced, and investors are back.
Analyst Chris Garman is with the Eurasia Group.
CHRIS GARMAN: Brazil’s government pursued responsible and orthodox monetary policy, drove inflation down, and as a result, the country’s debt-to-GDP ratio has been declining ever since.
Brazil even has $162 billion in reserves. The country’s leftist administration says it will use that money not for social programs, but for investments with a potentially high return. Professor Riordan Roett is with Johns Hopkins University. He says Brazil’s President Lula has made fixing the country’s finances a matter of national pride.
RIORDAN ROETT: He’s able to explain to the poor that the reason bolsa familia and the various social investment programs are working is because the macroeconomics are so strong. And for the first time in Brazilian history, poverty levels have begun to drop, and that’s what got him elected the second time.
The international community is getting ready to reward President Lula for his fiscal discipline. After years languishing at junk status, Brazil’s credit rating is expected to be lifted next year to investment grade.
I’m Dan Grech for Marketplace.
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