Gov't studies rising IOF tax to restrict short-term capital - The Brazilian
government is planning to rise the Financial Operations Tax (IOF), today at 2%,
in order to restrict the inflow of foreign short-term capital. The idea is to select
foreign investments as a means of improving the quality of reserves.
According to the Central Bank director for Monetary Policy, Franscisco Lopes,
who, yesterday, pointed out the negative effects of short-term capital in the
economy, the measure will only be adopted after the crisis is under control and
foreign investments regain momentum. Lopes said the US$20bn that entered the
country right after the onset of the Asian crisis only aimed at the lofty return
provided by high interest rates, which, therefore, could not be interpreted as
being part of Brazil foreign exchange reserves.
Lopes affirmed that "the country had never had reserves of US$70bn, as they
were concretely at US$50bn."
This concept proposed by Lopes is new and only emerged after Brazil began
registering mounting losses -- totaling US$22bn by August 31.
It was very common to members of the government's economic team to boast
the tranquillity that the US$70bn reserves brought the country amid the
international crisis. Nowadays, according to the IMF's liquidity concept, Brazil's
reserves are at US$45.3bn. (O Estado de S. Paulo/ Jornal da Tarde/ Gazeta
Mercantil/ O Globo)
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President Cardoso's reelection practically confirmed - President Fernando
Henrique Cardoso's electoral committee interpreted yesterday the last opinion
poll conducted by Ibope-TV Globo-Estado as a practical confirmation of the
president's re-election in the first round of voting. The poll gave president
Cardoso 47% of vote intentions, representing a lead of 11 points over all other
candidates put together, while his main opponent, Luiz Inácio Lula da Silva,
received 24% of vote intentions.
An outstanding alteration in relation to previous polls was the 3 points rise
posted by the candidate of the Popular Social Party (PPS), Ciro Gomes, now
with 9% of vote intentions, followed by Eneas Carneiro, with 2%. (O Estado de
S. Paulo/ Jornal da Tarde/ Folha de São Paulo/ Jornal do Brasil/ O Globo)
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