Brazil's private sector needs to step up its participation in the huge investments planned for the fast-growing country in the next few years, the ruling party candidate for October presidential elections said, according to Reuters. In a two-page interview with the Estado de Sao Paulo newspaper published on Sunday, Dilma Rousseff said the government's role needed to be "rationalized" while continuing to provide guarantees for large state-backed projects. "The capital requirements in the area of logistics, energy as well as those of private companies are extremely high ... The (state development bank) BNDES won't have capital to meet all this demand," Rousseff told the paper. Rousseff has been handpicked by President Luiz Inacio Lula da Silva to succeed him when his second consecutive term ends this year. The constitution bars him from running for a third term. The latest poll published on Friday showed she had widened her lead over her main opposition rival Jose Serra. Rousseff said increased government lending through the BNDES, was a response to the credit crisis that erupted in 2008 and a means of cushioning the economy from the severe downturn that took hold elsewhere. The economic crisis interrupted Brazil's strong economic growth, plunging it into a recession which soon proved shallow and short-lived. It has been one of the few economies to begin raising interest rates since the crisis, to avoid overheating. The economy minister, Guido Mantega, expects growth of between 6.5 and 7 percent in 2010. Brazil has ambitious plans for investment in infrastructure including the Belo Monte hydroelectric dam in the north of the country, a state insurance company as well large investments to tap huge offshore oil reserves discovered in 2007. "National private banks need to have incentives to increase their presence. They are fundamental elements ... Pension funds in general need to get involved, private, public, part-public, we need to build our own financial machinery, through so-called infrastructure funds or by launching debentures," she said. COMFORTABLE WITH CURRENCY The role of the state has expanded significantly under the Lula government particularly in the last few years. It has also sought to increase its control of the oil sector as it expands but the legislation required looks unlikely to be passed before Lula's term ends on Dec. 31. Rousseff said she expected interest rates, raised last month by 50 basis points to 10.75 percent, would eventually begin to fall if the debt to GDP ratio continued to drop. She said she was in favor of an independent central bank. The country's currency, which has continued to hover around 1.8 reais to the dollar, despite temporarily weakening some 30 percent during the worst of the global economic crisis, reflected its true worth, Rousseff said. The country's exporters say the strength of the currency has left them struggling to compete as investors optimistic about Brazil's prospects, pump money into its markets. Rousseff said she would avoid heavy-handed intervention with the country's currency if elected, and instead advocate an "aggressive policy of financing" to help Brazilian firms compete globally. "I'm not inclined to believe this can all be resolved by manipulating the exchange rate, something I think is a bit of a primitive approach," she said. Asked about a growing trade deficit despite huge exports of commodities including iron ore, petroleum and agricultural produce such as soy, coffee, sugar and orange juice as well as automobiles, she said it was not a cause for concern. "Today imports are intermediate goods, more capital goods, and this equates to increasing the rate of investment. If we were importing non-durable consumer goods, I would agree (that it was)," she said.
