The Minister of Economy also announced that Brazil is working on joining the OECD and opening the country to foreign investors
Pablo Guedes, the Minister of Economy for Brazil, revealed in an online event that the country is looking into joining the Organisation for Economic Cooperation and Development (OECD). The Brazilian government also has plans to launch an initial public offering (IPO) of shares for the Caixa Econômica Federal, which recently created a digital bank.
The Caixa Econômica Federal set up a digital bank during the pandemic to help the government connect and send financial aid to around 64 million Brazilians.
Guedes’ comments were made during the Milken Institute Global Conference, in which he stated that the Central Bank was working on ways to attract new investors for the country. He highlighted the digital bank created by the Caixa Econômica Federal, which is a part of his privatisation plans.
Guedes also said that the Ministry of Economy is working with the Central Bank on a mechanism to offer foreign exchange hedge options.
“I think that we have to have a special mechanism because it is very difficult for those who come here to invest 10 years in a water station or railroad program. He wants to earn dollars plus 10%, dollars plus 12%, dollars plus 8%, and then in the last week he has a crazy race here for one political reason or another and then he loses his money ”, he explained.
The government is also working on modernising regulatory frameworks, which has been a requirement for foreign investors.
Throughout the pandemic, the government spent a large amount of funding to fight against the economic effects of COVID-19. The biggest part of that financial support was providing emergency payments for low-income Brazilians, with the Caixa playing a core role in the identification of beneficiaries and paying benefits.
Guedes stated that this initiative generated a digital bank with 64 million users and that it has opened up market opportunities.
“We digitised 64 million people. How much is a bank with 64 million people worth? Low-income people, but people who were (bank-registered) for the very first time, so they are going to be loyal for the rest of their lives”. Guedes explained.
Guedes also revealed that the Central Bank is working on finding ways to guarantee fewer risks to foreign investors.
According to Guedes, Brazil has already worked out two-thirds of the requirements that they need to fulfil to be accepted in the OECD. He expects the country to gain entry into the organisation in one year.