Brazil’s largest company, Petrobras, accused of political kickbacks

September 18, 2014

Jonathan Watts – The Guardian, 09/17/2014

The brutalist headquarters of South America’s biggest company, Petrobras, offers a harsh riposte to those who try to romanticise Brazil as a land of golden beaches and endless forest. This week, the concrete edifice in central Rio de Janeiro was the focus of a pro-oil rally by thousands of petrochemical workers amid a presidential election debate dominated by how to manage the nation’s vast fossil fuel reserves.

It is a question that has opened up the biggest gap between President Dilma Rousseff, an old industry champion of the Workers Party, and her main challenger Marina Silva, a former environment minister who has pledged to shift priorities towards alternatives energies like wind, solar and ethanol.

This is more than just a Brazilian rerun of George Bush and Big Oil versus Al Gore and climate concern, because state-run Petrobras is no ordinary company and – with the company also mired in a massive corruption scandal – this is no ordinary time.

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Brazil’s inflation to pierce target ceiling in mid-September

September 17, 2014

Silvio Cascione and W Simon – Reuters, 09/16/2014

Brazil’s annual inflation rate probably pierced the government’s target ceiling in mid-September as airfares rose and food prices slowed their decline, according to analysts surveyed in a Reuters poll published on Tuesday.

Consumer prices BRIPCY=ECI are seen up 6.57 percent in the 12 months to mid-September, slightly above the 6.5 percent ceiling of the official target range, according to the median of 23 forecasts in the survey.

In the month to mid-September, consumer prices BRIPCA=ECI probably rose 0.35 percent, up from a 0.14 percent gain in the month to mid-August, according to the median of 28 forecasts. The inflation data is due to release on Friday at 9 a.m. (8 a.m. EDT.)

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Coffee experts fear for Brazil harvest

September 17, 2014

Emiko Terazono – Financial Times, 09/07/2014

Divining the health of branches, floral buds and roots of coffee trees in Brazil has become key to millions of dollars being made or lost after a devastating drought hit the country at the start of the year. Recent discussions among roasters, analysts and hedge fund managers have focused on coffee agronomy, says Keith Flury, head of research at Volcafe, the coffee division of commodities traders ED & F Man.

“Given the unprecedented drought, industry and trade have had to increase knowledge about moisture deficits and the impacts on plants,” he says.

Brazil is the largest coffee producer in the world, accounting for about 35 per cent of all output. In the past, the main weather problems for the country’s coffee growers have been frosts – few farmers and traders have had to deal with the consequences of heat and dryness.

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Brazil announces new tax breaks for business

September 16, 2014

EFE – Fox News Latino, 09/15/2014

Finance Minister Guido Mantega presented here Monday a package of tax measures aimed at stimulating Brazil’s economy less than a month ahead of the presidential election.

“We want to make Brazilian industry more competitive and reduce juridical insecurity,” he said after meeting in Sao Paulo with representatives of the powerful CNI business confederation.

The changes include extending to all industries a reduction in the rate of tax on overseas profits from 34 percent to 26 percent. Until now, that benefit has been available only to firms in construction, services, food processing and the beverage sector.

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Silva Would Tie Rousseff in Brazil Election Runoff, Poll Shows

September 16, 2014

Anna Edgerton – Bloomberg News, 09/15/2014

Brazil President Dilma Rousseff is tied with Marina Silva for an Oct. 26 election runoff, according to a Vox Populi poll released yesterday.

Rousseff would have 41 percent support in a second-round vote, statistically tied with 42 percent for Silva, according to the poll published on the website of TV news program Jornal da Record. The result falls within the 2.2 percentage-point margin of error for the Sept. 13-14 survey of 2,000 people. The two candidates were also tied in the last Vox Populi poll published on Carta Capital magazine website Sept. 10.

Brazilian stocks, especially state-owned companies like Petroleo Brasileiro SA (PETR4), rallied last month as Silva pulled ahead in polls, only to fall with last week’s surveys showing the incumbent recovering lost ground. The Ibovespa (IBOV) stock index plunged 2.4 percent on Sept. 12 when a National Industry Confederation poll showed Silva technically tied with Rousseff. Petrobras fell 5 percent.

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Silva Aide Outlines Plan to Lure More Investors to Brazil

September 15, 2014

Presidential candidate Marina Silva wants to make Brazil alluring to investors again by improving public finances and giving the central bank more independence, her campaign coordinators said Monday.

Mauricio Rands, one of Ms. Silva’s main economic advisers, said the candidate will adopt “rigorous” fiscal policy and refrain from “putting makeup on public finances.” Critics accuse current President Dilma Rousseff’s administration of using questionable accounting procedures and one-off revenue sources, such as a tax amnesty program last year, to meet its fiscal targets.

Speaking at an event at the U.S.-Brazil Chamber of Commerce, Mr. Rands also highlighted Ms. Silva’s proposal to pass a law creating an independent central bank. The credibility of the Central Bank of Brazil, which lacks the institutional autonomy that most developed countries enjoy, has been questioned by some economists in recent years for letting inflation run too high and for intervening in the currency market.

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