Professor Alixis Toribios Dantas seems to have clear ideas about the debt crisis affecting the eurozone: the debt of the Greeks is unpayable and the problem lies only with the French and German banks. For the Greek people, the best solution would be to return to the drachma. Then it will be Europe's task to resolve its crisis which is political, not economic. Toribios Dantas also made an analysis of the economic policy of the Brazilian president, Dilma Rousseff.
FIRST online – Professor, in recent months the Brazilian economy has slowed down (the Central Bank has revised its 2011 GDP estimates downwards to +3,5%) and the stock market has lost a lot (the Bovespa in the last 3 months has almost a -20%). Many believed that, as already happened in 2008, Brazil was able to avoid contagion, and yet, can we say that the crisis has also affected your country?
Tobirios Dantas - No doubt. Now all crises are global. What happens on the other side of the world always affects us in one way or another. In Brazil the crisis has damaged exports and the financial market, above all with the lowering of commodity prices. Furthermore, the decrease in the interest rate has led to speculative movements which have increased the value of the dollar; the same happened to the euro in Europe. It is not true that in 2008 the crisis did not infect us. In 2009, GDP had decreased, not by much, but the economy had slowed down. However already in 2010, thanks to the increase in demand in the internal market, it had immediately recovered. But now, I repeat, all crises are global.
FIRST online – Dilma Rousseff stated that Brazil is “EU partner” and that it will undertake to contribute to the recovery of the European economy. How do you think he will do about it?
Tobirios Dantas – I think this aid movement will be general and many other important countries, such as China, will be part of it and Brazil will certainly collaborate. But the European debt crisis is a political crisis not an economic one. At the monetary level it is clear: the Greek debt is unpayable, I believe there is no way to find the necessary capital to repay the creditors. The Greeks should declare default and start printing drachmas again. The problem is only with French and German banks, and they know it. But they keep pretending to find a solution. And in the meantime, the situation worsens for the Greeks. It's all in the hands of European leaders.
FIRST online "Doesn't it leave any hope for the Greeks?"
Tobirios Dantas – If the Greeks started receiving their salaries in drachmas they would be better off. And the French and German banks should think about extending debt maturities so long that it would be tantamount to acknowledging that they will never see that money again. However, in this way they could start over and "in good standing".
FIRST online – Some bank, like Dexia, has already started to wobble, maybe sooner or later they will give way for real. But let's go back to Brazil. What is Dilma Rousseff's economic policy? Is it very different from Lula's?
Tobirios Dantas – Dilma is following a Keynesian fiscal policy with more orthodox moves in monetary policy. He is very concerned with giving a fiscal stimulus to development and he does it through public transfers (such as the Bolsa Familia project), increasing the minimum wage, supporting some markets and improving the conditions of the poorest population. But also through an industrial policy to stimulate innovation and exporting companies. Finally through investments in infrastructure (especially in railways and urbanization). Fiscal policy is not too different from Lula's but foresees greater efforts and greater dynamism of the economy.
FIRST online – What about monetary policy? What are the relations between Dilma and the Central Bank?
Toribios Dantas – Government and Central Bank remain two separate institutions. But now the president of the BC is no longer a former director of a private bank, but he follows a distinguished career, apart from that, for this reason he is more oriented towards meeting the country's development problems. Monetary policy has not changed much since the previous government. We continue to have a sky high interest rate, even though it's been slightly lowered and I think they will lower it again at the next meeting. Finally, as regards the exchange rate policy, there is a tendency to value the real a little more, so that imports are not a problem for the internal economy.
FIRST online – You deal with foreign direct investment, Brazil was defined by one JP Morgan study, the country that most attracts foreign investors. Who are the most interested? Is fresh capital arriving in the country for the World Cup in 2014 and the Olympics in Rio in 2016?
Toribios Dantas – There are still not many foreign investments towards the Games. Most come from Brazilian entities and I think there is still room to welcome foreign investors. In Brazil in general more than half of FDI comes from China. They are the most interested, not only in Brazil, but also in Peru, Argentina and Chile, more than half of foreign capital comes from the Asian giant.
FIRST online - It's Italy?
Toribios Dantas – No, relations with the Italians are not that important, or at least, not yet. Investments by Italians in Brazil do not exceed a share of 2%, but we like Italians. If they decided to invest more with us, they would certainly be welcomed.
