The Economy this week | The Impartial Latin American News Link

World Bank grants Mexico a loan to combat climate change, Brazil uses tax measures to stop the rise of its currency and Venezuela?s crude price rose

Mexico receives loan to combat climate change

Last week, the World Bank gave Mexico a US $300m loan to help the country deal with drought and support further preventive measures against climate change. The Mexican Social Development Secretariat and the Agriculture Secretariat will jointly manage the funds ?and aim to help society overcome challenges caused by extreme conditions due to climate change. The Social Development Secretariat said that the loan will be repaid at a variable rate of interest and will be due mid-August 2023.

Heriberto Felix, the head of the secretariat, announced that government efforts to guarantee food and water supplies to families affected by drought will continue, while at the same time developing more productive family vegetable gardens and installing rainwater collection facilities. Further programs will include better risk management for infrastructure and services by protecting the ecosystem. Overall, around 2,000 rural indigenous communities around the country will benefit from these measures, the secretariat said.

Brazil fights Real appreciation

In an attempt to curb the rise of the Real against the dollar, the Brazilian government announced the expansion of a 6% tax on loans from abroad. The Tax on Financial Operations (IOF) originally applied to foreign-oriented loans of 2 years, but will now also extend to 3 year loans to stem the Real?s appreciation against the dollar. Thereby, the government intends to inhibit the surging inflow of foreign exchange.

The continuous dollar inflows in the past has driven the value of 1Rreal/1.70 US $ which makes Brazilian exports expensive. Despite the Brazilian Central Bank?s repeated interventions in the currency market, the real has climbed 8.19% so far this year. The deeper problem for policy makers, however, is Brazil?s high interest base rate at 10.5%.

In February, Brazil ran a trade surplus of US$ 1.715m, with exports at US$18.028m and imports amounting to US$ 16.313m, the Ministry of Development, Industry and Commerce stated. While this surplus came after a trade deficit in January of US$1.291m, the February surplus is nevertheless lower than expected.

Venezuela?s oil price rises

The price for Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) skyrocketed last week by US$2.51 to a total of US$117.10 per barrel, the Ministry of Energy and Petroleum reported. As concerns over attacks on Iran?s nuclear facilities rise, the price on international markets continues to rise. Venezuela registered its highest weekly average prize on 18 July 2008 when it hit US$126.46, just before the global economic crash.

Source: http://www.pulsamerica.co.uk/2012/03/05/the-economy-worldbank-mexico/

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