Brazil's economic growth depends more on the approval of austerity measures needed to rebuild investor confidence than on a weaker currency, Finance Minister Joaquim Levy told O Globo newspaper.
After the Brazilian Real tumbled to its weakest level in more than 10 years, Levy downplayed the notion that a weak currency is the key to making Latin America's largest economy grow again.
The idea that a weaker currency is the big solution to Brazil is not correct, despite its popularity in some circles, he said in the interview.
The Real has lost about 15% of its value so far this year, also hurt by fears that the government lacks political strength to drive Congress to approve the austerity measures proposed by Levy and President Dilma Rousseff.
The sharp currency depreciation is likely to fuel inflation, which is already running at 7.75% annually, way above the official target of 4.5%.
The minister noted, however, that the dollar has been strengthening against most global currencies and not only the Real. The inflation pass-through from the Real's recent slump will be contained as the central bank makes full use of its monetary tools, he added.
Levy said Brazilians support measures to fight inflation as much as they support policies to balance the government's budget.
Fears that the government will have a hard time in getting austerity measures approved increased after protests erupted in Brazil's main cities during a nationally televised speech in which Rousseff appealed to Brazilians to back those policies.
Most people understand that without a balanced budget we won't grow, Levy said.
He forecast that the economy, which many analysts expect will shrink more than 0.5% in 2015, may resume growth later in the year in a quarter-to-quarter comparison as long as investor confidence returns.
”As the (fiscal) measures take effect, and Congress approves them, confidence will return, he said. We need to have a little patience”.