Brazil's Ministry of Finance announced a package of measures Wednesday in a bid to halt the devaluation of the U.S. dollar against the local currency real and prevent a slump in the country's trade balance surplus in the next few years.
The measures include higher taxes on speculative investments from abroad and advantages for Brazilian exporters.
The highlight of the measures was the suspension of the compulsory foreign exchange cover, under which exporters had to bring back a part of the revenues obtained from foreign trade. The ministry also determined that a 1.5 percent tax will be charged on foreign investments in federal bonds and in fixed-income asset, in the form of the so-called Tax on Financial Operations (IOF). IOF will no longer be charged on exchange operations of exporters.
Further, Finance Miniser Guido Mantega said the country's industrial policy will be "redesigned," so as to prearrange tax incentives mainly for exporters, a move that relies on pre-approval from President Luiz Inacio Lula da Silva.
The measures will come into effect Monday, March 17. The U.S. dollar was traded at 1.68 reals Wednesday, less than half its value in 2003, when President Lula took office for the first time. As a consequence, Brazil's trade surplus dropped from 46 billion U.S. dollars in 2006 to 40 billion dollars in 2007, and it is not expected to exceed 30 billion dollars this year.
Source:Xinhua
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