The view toward closer U.S.-Brazil Relations

May 23, 2013

Julia E. Sweig – Council of Foreign Relations, 05/22/2013

Vice President Joe Biden will visit Brazil, Colombia, and Trinidad and Tobago next week. Don’t assume this American vice president is merely ceremonial: he has a significant domestic portfolio including immigration, guns, and the budget. Nor is his visit one of those bloated good will trips meant to dole out patronage or shore up support for some American foreign venture. Rather, it seems the Obama administration has decided to try and seize a huge, and to date largely missed opportunity related to jobs, energy, and prosperity in Latin America.

Why the sudden awakening? Immigration reform, the President’s top legislative priority this year, and a political must for both parties, has alerted the White House to the potential foreign policy benefit in Latin America, and not just Mexico, of solving a major domestic problem. In fact, the White House and the American public’s disposition to deal with once untouchable domestic politics around immigration, guns, energy, marijuana legalization, and maybe even Cuba, open the door for potential convergence with Latin America. And provide a chance to get beyond the usual ideological battles that too often sap diplomatic energy and patience.

Biden arrives in Brazil five months before President Rousseff’s state visit to the United States and ten years since President Bush and President Lula convened their cabinets for a joint ministerial meeting, their recognition of the strategic potential for the two democracies and their economies. Since then, dozens, if not hundreds, of ministerial and sub-ministerial meetings have followed. And we have stitched together dozens of inter-governmental dialogues, initiatives, defense, business, scientific, and educational exchanges. Yet there is still something missing between the two powers—call it a lack of ambition.

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Brazil to eliminate payroll tax on bus fares – finance minister

May 23, 2013

Reuters, 05/23/2013

Brazil will eliminate a payroll tax on bus fares, Finance Minister Guido Mantega said on Thursday, in another measure to curb consumer price increases as inflation hovers near the ceiling of the government’s target.

The change in the so-called PIS/Cofins tax will be announced through a provisional measure by President Dilma Rousseff in coming days, Mantega told journalists. The current tax rate was not immediately clear.

Stubbornly high inflation has dented business and consumer confidence in Latin America’s largest economy, complicating Rousseff’s efforts to boost economic growth.

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Philippines, Brazil agree on new flights

May 22, 2013

Paolo G. Montecillo – Philippine Daily Inquirer, 05/22/2013

Daily flights between the Philippines and Brazil, South America’s largest country, may start soon following the approval of new air rights between the two countries this week.

The  on Wednesday announced that the Philippine and Brazilian governments had signed an air agreement.

Under the accord signed by the Philippine air panel this week, a total of seven flights a week are now allowed between Manila and any point in Brazil. The agreement also includes an unlimited number of flights between any point outside of Manila to any point in Brazil.

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Brazil freezes $13.7 billion from budget to meet fiscal goal

May 22, 2013

Maria Luiza Rabello, Matthew Malinowski – Bloomberg, 05/22/2013

Brazil’s government has frozen 28 billion reais ($13.7 billion) in its 2013 budget as it tries to meet its primary surplus target, Finance Minister Guido Mantega said.

Officials did not freeze portions of the budget set aside for investments and hosting the World Cup soccer tournament, Mantega told reporters today in Brasilia. The government may increase abatements against this year’s fiscal surplus goal to 45 billion reais, Mantega said, up from February’s estimate of 25 billion reais.

President Dilma Rousseff’s administration this year is seeking to meet Brazil’s primary surplus goal of 155.9 billion reais without undermining economic growth. Authorities have extended tax cuts and increased spending to spur the economy, even as such measures have helped keep annual inflation near the 6.5 percent upper limit of the central bank’s target range.

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Despite stumbles, a promising path for start-ups in Brazil

May 22, 2013

Vinod Sreeharsha – The New York Times, 05/21/2013

Brazil’s Internet start-ups were once the darlings of emerging markets, attracting venture capitalists from around the world. But after two-plus years of growth, the sector is facing tougher times.

Numerous young companies, even those with prominent investors, are struggling to show sustainable profitability despite early rapid growth in revenue. A case in point: Shoes4You, an e-commerce site selling designer footwear, decided to close down last month, despite being backed by the prominent United States investment firms Redpoint Ventures, Accel Partners and Flybridge Capital Partners.

Many in the industry consider its failure a harbinger of things to come. “I expect a lot of shut-downs, and that a lot of companies will be firing people,” said one of the site’s backers, Fabrice Grinda, a prominent French angel investor.

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Despite risks, Brazil courts the millisecond investor

May 22, 2013

Dan Horch, Nathaniel Popper – The New York Times, 05/22/2013

At a time when the mere phrase “high-frequency trading” makes some investors queasy, Brazil’s stock exchange is putting out the digital welcome mat.

In recent years, the BM&F Bovespa stock exchange in São Paulo has taken steps to make its market more friendly to high-speed traders, even as many regulators around the world are casting an increasingly skeptical eye on the sector after a series of well-publicized market malfunctions in the United States.

Lawmakers in Canada, Australia and the European Union have been looking at imposing limits on such traders, whose investment time horizons are measured in milliseconds rather than months.

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Roberto Azevedo’s WTO appointment gives Brazil a seat at the top table

May 21, 2013

Nicolas Bourcier – The Guardian, 05/21/2013

Earlier this month the World Trade Organisation (WTO) announced that it had chosen the Brazilian Roberto Azevedo, 55, as its next director general. In September he will take over from France’s Pascal Lamy, who has served two four-year terms.

It is a personal success for this career diplomat, but it is also a victory for Brazil on the international scene. The Brazilian diplomatic corps pulled out all the stops to convince a majority of the 159 member states that their candidate was the right choice. But Azevedo’s appointment is also a new departure, this being the first time that a Brazilian has headed one of the key bodies in the postwar Bretton Woods system. The country at last has a seat at the top table.

The vote “shows a global order in transformation”, said foreign minister Antonio Patriota, with “emerging markets [showing] leadership”.

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Rumors spark bank run, break-ins in Brazil

May 20, 2013

Deepanshu Bagchee – CNBC, 05/20/2013

Rumors that Brazil’s social security fund called Bolsa Familia was to be cancelled led thousands of people to rush to withdraw money from a Brazilian bank over the weekend.

Customers lined up at ATMs at dozens of bank branches of Caixa Economica Federal, a government-owned bank, which pays the social security subsidy on Saturday and Sunday.

“The bank branches themselves aren’t open on Saturdays. What happened is that once the rumor gained momentum, people flocked down to their local branches to try to withdraw money from the ATMs,” Rafael Carregal, a journalist at Brazil’s main TV network Globo told CNBC.

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Brazil economists forecast 2013 growth below 3% for first time

May 20, 2013

Raymond Colitt – Bloomberg, 05/20/2013

Brazil’s economy will grow below 3 percent in 2013, economists predicted for the first time in a central bank survey of about 100 analysts published today.

Latin America’s largest economy will grow 2.98 percent this year, down from the previous week’s projection of 3 percent. It would be the first time in a decade that Brazil grows below 3 percent for three consecutive years.

Brazil’s economy has struggled to recover from last year’s expansion of 0.9 percent as accelerating inflation undermines consumer demand. While economists raised their 12-month inflation forecast to 5.64 percent from 5.57 percent, they maintained their projection for inflation this year and next at 5.8 percent, according to the survey.

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Brazil’s No. 2 finance ministry official to quit post in June

May 14, 2013

Reuters, 05/13/2013

Brazil’s deputy Finance Minister Nelson Barbosa, who helped design some of the government’s flagship economic projects, has handed in his resignation for personal reasons and will leave the post in June, the ministry said on Monday.

Folha de S. Paulo newspaper reported his departure over the weekend, citing loss of influence within President Dilma Rousseff’s government as the reason for his resignation.

Folha said Barbosa, once a close advisor to Rousseff, had lost access to the president with the rise of Treasury Secretary Arno Agustin, who is expected to take his place as the ministry’s executive secretary.

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