Brazil Back to the Top of World’s Highest Interest Rate, at 9.50%

    Brazilian money, the real

    Brazilian money, the real Copom, Brazil’s Monetary Policy Committee, linked to the Central Bank (Brazil’s Fed), decided to raise Brazil’s benchmark interest rate, known as the Selic, to 9.50%.

    The rate had been steady at a historical low of 8.75% for nine consecutive months. The decision was unanimous and reflects concern with inflation as the Brazilian economy has charged out of the Great Recession.

    At the last Copom meeting, in March, three of the eight directors had already voted to raise interest rates, but were defeated.

    With this decision, the economy will slow a little and Brazil returns to the top of the list of country with the world’s highest real interest rates (which will now be 4.5% annually).

    Indonesia is in second at 3%, followed by China at 2.8%. The fact is that most of the world, with everyone scalded by the international financial crisis, has their basic interest rates near zero.

    Income Tax Time

    Computers at the Brazilian IRS (“Receita Federal”) are humming away. An average of 190,000 income tax returns are coming in per hour. Wednesday, April 28, at noon, a total of 17,900,000 returns had been delivered.

    That is almost 75% of the 24 million expected this year. Or, to put it another way, one out of every four Brazilians who have to file had still not done so. The deadline is today, April 30, at midnight.

    Here is some information about income taxes in Brazil. Everyone in Brazil who had income of over 17,215.80 reais must file a return. That comes out to almost US$ 10,000 at the current exchange rate.

    There are two tax rates: 15% and 27.5% (for investments there are four – the highest is 22.5%). Brazilians can deduct dependent children to the age of 21, 1,730 reais (about US$ 1,000) each.

    Educational expenses can be deducted up to 2,708 reais (around US$ 1,590) per dependent. In Brazil more than 99% of all income tax filings are made electronically. And, finally, it should be pointed out that in Brazil the minimum wage (per month) is 510 reais (around US$ 300).

    ABr

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    • Show Comments (5)

    • GuiL

      Being realistic
      I’m Brazilian, but I also have the italian passport, I’m moving to Europe next year (2011). So, this is the REAL DEAL in Brazil!
      Brazilian basic interest rate is now at 10.75% and growing up at each 3 months… you can expect 12/13% years soon.
      But this tax makes no sense. For earning interest by apllying your money, you can get 6% year in “poupança”, if you deposit your money there, or something like 7.5% (free of tax) by depositing your money in a CDB and letting it there for an year or more. BUUUUUUUUUT for taking money borrowed, there’s no such thing as 10.75% year!!! For houses maybe, in special cases, something close to 10.75%… but for cars it’s something like 1.5% month (we use month here, not year.. but you can calculate it, compounding the interest. Do (1,015)¹², or 1,015 x 1,015 twelve times :-), it’s like 19/20% year for cars. Any form of MONEY credit in the account, the taxes gets MUCH bigger. A basic tax would be 5% month (trust me, this is the middle value)… or 80% year compounding the interest. The worst situation is “using the bank credit limit” or not paying the “credit cards”. These taxes are between 9 and 14% MONTH!!! Let’s use the middle value, 11.5% to compound, it’s the amazing interest of 270% YEAR 🙂

      And.. answering the question, teachers here don’t earn much, as the general population don’t too 🙂 Any one who earns more then R$ 1137 (U$ 600 dollars) is considered “middle social class”, THIS IS FREAKING RIDICULOUS… an iphone here costs almost twice as that, something like R$ 1800 (and i’m not talking about the latest model!). The brazilian “per capta” is something like R$ 1200 reais.

      Car prices, just to know. The cheapest NEW car you can buy in brazil costs R$ 24.000 and does 0-60 mile/hour in 16.6 secs xD
      The gas costs R$ 2.40 (a liter… not gallon, a galon is 3.8 liters). So we pay something like 5 dollars a gallon =/
      Any NICE car is VERY expensive: New Civic > R$ 60.000, Used Audi TT or BMW Z4 (both year 2006) > aprox. R$ 130.000 / 140.000, New Ford Mustang > R$ 150.000, Hyundai I30 > R$ 55.000, New Civic Si > R$ 95.000/100.000

    • larry green

      Teacher’s Salaries in Brazil
      I was wondering ???? what is the average teacher’s salary in Brazil. Can anybody answer that question

    • Brasilia

      lulz
      [quote]In Brazil loans are not so easily come by. Therefore we had no sub-prime mortgage crisis.
      Brazil is now not a country run on credit as is the USA.
      WE are not bankrupt – as is the USA.
      We have not sold our children out to the Chinese – as has the USA.
      We do NOT have 10% unemployment – as has the USA (its at an historic low).
      Our economy is booming and so you can keep the low interest rates in “your country” [/quote]

      True, loans are not easy to come by, but that will change as the middle class sector grows and consumption drives the economy. Large ticket items like cars & homes, the two biggest purchases people make, if Brazil want’s to grow and solidify it’s financial market, it will eventually have to offer greater access to credit. Hopefully with government banking over sight that is a tad more stringent than the US and Europe.

      The USA is not bankrupt, just deeply in debt. One day Brazil will be in the same spot. Government is notoriously inefficient when it comes to managing money. As for the recession, the USA will climb out of it as it has in the past.

      You are in the process of selling your children to the Chinese. Lula just boasted that China is Brazil’s largest and most important trading partner. Hard to compete with a country that has 1.3 billion people who don’t get to enjoy all the work place protections most workers enjoy in the rest of the world. Brazil will fall into the trap of cheap products from China, soon Brazilian companies will be out sourcing jobs just like in every other Western country. At the end of the day it is all about maximizing profit and keeping stock holders happy.

      You’re right, you don’t have 10% unemployment, you have 13% unemployment. That 10% you pointed out will eventually fall back to it’s normal 4.5% where Brazil will still be enjoying historic lows in the 13% range for years to come.

    • Lucinda

      But in your world…
      In Brazil loans are not so easily come by. Therefore we had no sub-prime mortgage crisis.
      Brazil is now not a country run on credit as is the USA.
      WE are not bankrupt – as is the USA.
      We have not sold our children out to the Chinese – as has the USA.
      We do NOT have 10% unemployment – as has the USA (its at an historic low).
      Our economy is booming and so you can keep the low interest rates in “your country”

    • ch.c.

      Brazil Back to the Top of World’s Highest Interest Rate, at 9.50%
      But….but…. even at 8,75 % you were at the Top of the World !!!
      Therefore you are not BACK to the top, you STAY at the Top !

      Especially on an after inflation basis.

      I red recently that your average borrowing rates are at 42 % or so !

      ENJOY YOUR borrowing.
      Another WORLD RECORD ! YOU ARE FLYING HIGH.

      In the meantime, in my country we can have 5 years mortgage rates at 2,25 %, 10 years at about 2,75 – 3 %. And at 1,2 % (annual) rate for 3-6 months !

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