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Rogoff on Brazil and good management

"I think that people were impressed by how successfully Brazil weathered its last storm. Brazil had a flexible exchange rate, and the flexible exchange made possible what I think wouldn’t have otherwise been a smooth transition of power from President Cardoso to President Lula da Silva. That much said, Brazil’s debt is still 55 percent of GDP, and I think it still is vulnerable. I wouldn’t say it’s exceptionally vulnerable in the club of 25 emerging markets, all of whom are vulnerable, but it has a long road ahead.

"To meet its debt Brazil has basically committed to run a surplus on the order of 3.5 to 4 percent per year. Turkey is more than 6 percent. These are big numbers and sometimes countries decide not to do that. If you look at what happens to a country when it experiences these horrors of debt restructuring, trying to force the debt down, GNP goes down but in actuality never by much more than that. And so countries sometimes decide to restructure. Brazil is not about to do that in the near future."

Excerpts from remarks by Kenneth Rogoff, Director, Center for International Development, Harvard University