Minister of Finance Guido Mantega has rebutted a report by the International Monetary Fund (IMF) where it rated Brazil among the emerging economies most vulnerable to external crises. In his remarks on Tuesday (July 29), he said economic indicators for the first half of 2014 show that foreign investors remain interested in the country, in spite of the US Federal Reserve (Fed) tapering its quantitative easing measures.

The minister also noted that foreign direct investments – which create jobs in the country – have remained above $60 billion in 12 months for the fourth straight year. Moreover, Mantega said, the Brazilian real appreciated 9.4% in the first semester, and the São Paulo Stock Exchange (BOVESPA) was up 21.25% in the same period.

According to Mantega, the report was prepared by lower echelons of the IMF and repeats the same mistakes of earlier documents disclosed by financial institutions and international organizations that report a “perfect storm” for Brazil's economy this year and place Brazil among the five weakest emerging countries. “The storm never came, the scenario described by the reports wasn't fulfilled,” he said.

The minister pointed out that Brazil has the fifth largest international reserves in the world, around $380 billion. The sum exceeds the public and private external debt of $330 billion, enough to see Brazil through for a long time in the event of a shortage in foreign capital.

“Out of the total debt amount, only 7.6% is due short-term – the lowest rate among emerging countries. Should capital flows cease, Brazil would have enough cash for quite a long time,” he said.

Traditionally, the main indicator of external vulnerability of an economy is its current account deficit – the sum of the balance of trade (difference between exports and imports), services, income, and current transfers (donations from emigrants and foreign organizations). A negative current account makes a country dependent on international speculative capital, foreign loans and foreign direct investment to settle its balance of payments.

According to the Central Bank, the current account deficit in Brazil totaled around $86 billion – 3.58% of the country's Gross Domestic Product (GDP, the sum of all wealth produced in the country) in the 12 months that ended in June. The result was its worst since 2001, the Minister said that the problem is temporary and that the deficit should narrow in the coming months.

“Last year, the current account deficit rose because of the petroleum account [oil imports greater than exports], which took $17 billion out of the balance of trade. Now with the increase in Petrobras's production anticipated at 8% this year, this scenario is shifting. And analysts were aware of that,” he argued, without giving any forecasts for the current account deficit in 2014.