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Cablegate: Brazil: U.S. Treasury Secretary Paulson Meeting With

VZCZCXRO3785
PP RUEHRG
DE RUEHBR #1335 1971442
ZNR UUUUU ZZH
P 161442Z JUL 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 9514
INFO RUEHBR/AMEMBASSY BRASILIA
RUEHRI/AMCONSUL RIO DE JANEIRO 4771
RUEHSO/AMCONSUL SAO PAULO 0376
RUEHRG/AMCONSUL RECIFE 6942
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHAC/AMEMBASSY ASUNCION 6213
RUEHBU/AMEMBASSY BUENOS AIRES 4912
RUEHSG/AMEMBASSY SANTIAGO 6358

UNCLAS BRASILIA 001335

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR FOR CRONIN
STATE PASS FEDERAL RESERVE BOARD FOR P.ROBITAILLE
TREASURY FOR OASIA - J.HOEK
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/SHUPKA
STATE PASS USAID FOR LAC

E.O. 12958: N/A
TAGS: ECON EFIN PGOV BR
SUBJECT: BRAZIL: U.S. Treasury Secretary Paulson Meeting with
Planning Minister Bernardo

1. (SBU) In a July 11 meeting with Planning Minister Paulo Bernardo,
U .S. Treasury Secretary Henry Paulson outlined the focus of his
visit to Brazil: (1) increasing private sector infrastructure
finance; (2) facilitating the development of small and medium-sized
enterprise development through increased access to capital and a
reduction in business barriers; (3) increasing the production and
usage of biofuels; and, (4) increasing commercial interchange
between the U.S. and Brazil through channels such as the CEO forum.


2. (SBU) Secretary Paulson indicated his interest in promoting
bilateral cooperation and in defining a bilateral agenda that will
lead to specific, tangible results. He noted that Treasury recently
announced initiatives in infrastructure finance (in conjunction with
the IFC and IDB) and small and medium-sized enterprise development
in Latin America (in conjunction with OPIC). He also stated that he
hopes to expand Treasury technical assistance with Brazil and the
region in these areas and that he is interested in increasing
staff-level interaction between U.S. Treasury and Brazil's Planning
and Finance Ministries.

3. (SBU) Minister Bernardo discussed the progress as well as the
continued economic challenges that Brazil faces. He noted the
country's substantial macroeconomic progress in recent years (higher
growth, improved fiscal performance, lower and more stable rates of
inflation), rising personal disposable income levels, and the
favorable impact of rating agency upgrades of Brazil to investment
grade status, which will serve as an important catalyst for further
private investment.

4. (SBU) Minister Bernardo highlighted increased spending on
infrastructure as Brazil's major economic challenge. He noted that
the positive role played by IFIs (World Bank and IDB) in improving
the country's infrastructure, but felt they should further increase
their involvement. Specifically, he recommended that the World Bank
augment its use of guarantees to help leverage more private
investment. Minister Bernardo gave one specific example where he
believes increased infrastructure investment will benefit Brazil's
economy - the development of a rail network across the Amazon region
in lieu of much costlier road construction. Minister Bernardo said
he had a number of other "big infrastructure projects" in mind (but
did not give specifics), and agreed with Secretary Paulson's
suggestion to increase future staff-level dialogue.

Sobel

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