Brazil moved aggressively to shield its economy from a widening global financial crisis on Thursday, taking a flurry of measures to boost consumption and investment in Latin America's biggest country. The announcement comes just one day after Brazil's central bank cut interest rates for third straight time to shore up credit, citing mounting concerns about the impact of the eurozone debt crisis on the Brazilian economy.
Financial markets rallied on the new measures, with the Bovespa stock index surging as much 2 percent and the currency more than 1 percent. Shares in exchange operator BM&FBovespa jumped more than 7 percent and retail stocks also gained. The government of President Dilma Rousseff is seeking to prevent the global crisis from derailing Brazil's boom, which has lifted more than 25 million people out of poverty over the last decade and made the country an emerging powerhouse.
"We won't allow the global crisis to contaminate the Brazilian economy," Finance Minister Guido Mantega said at a news conference in Brasilia, adding that the measures aim to ensure that Brazil's economy starts 2012 on the upswing and grows 5 percent next year. The measures, which take effect immediately, encompass a broad spectrum of the economy, from stock and bond purchases to tax breaks for domestic manufacturers. They include: Eliminating the IOF transactions tax on foreign purchases of Brazilian stocks.