March 25, 2014
Brazil-U.S. Business Council, 3/25/2014
The Brazilian Finance Ministry, in a statement, was highly critical of Monday’s decision by international credit rating agency Standard & Poor’s to downgrade Brazil’s sovereign rating by one notch to BBB- from BBB. The statement said the downgrade was “inconsistent with Brazilian economic conditions.” S&P said risks to Brazilian debt have grown due to factors such as persistent inflation and deteriorating public accounts. The Finance Ministry said Brazilian accounts were “in order” and noted that Brazil’s government has consistently met primary budget surplus targets over the past decade. The Ministry also argued that Brazil has produced a consistent pattern of economic growth despite unfavorable global conditions in the past five years. The Ministry added, “Brazil is committed to investment as a priority,” noting the development of a sweeping infrastructure concessions program in recent years. Finally, the Ministry noted Brazil’s $378 billion in foreign reserves as a backstop against any international credit risk. Brazil’s credit rating is now at the minimum level for maintenance of “investment grade.” The downgrade will likely result in higher service costs for Brazilian private and public debt. S&P on Monday also downgraded Petrobras and Eletrobras by one notch to BBB-.
February 6, 2014
The Economist, 4/8/2014
“IN BRAZIL,” Pedro Malan, a former finance minister, likes to say, “even the past is unpredictable.” The dictum has come to haunt Itaú Unibanco, the advisory board of which Mr Malan chairs. The bank, along with Banco do Brasil and Spain’s Santander, awaits judgment by the supreme court over its actions a quarter of a century ago. Depositors claim the trio’s subsidiaries took advantage of government efforts to quash hyperinflation to fleece owners of inflation-linked accounts. If the justices side with depositors, other lenders that offered similar instruments may also be on the hook. The bill could reach 150 billion reais ($62 billion), according to the central bank.
The finance minister, Guido Mantega, and the central bank’s governor, Alexandre Tombini, have signed an open letter warning that a defeat for the banks may starve the economy of credit. (So did all their living predecessors, regardless of political or economic persuasion.) Such a decision might also prompt Banco do Brasil and Caixa Econômica Federal, which are state-controlled and between them hold roughly half of all savings accounts, to seek a government bail-out, denting Brazil’s already fragile public finances.
Walter Faiad of the Consumer Protection Institute, an outfit involved with the savers’ claims, argues that banks would lose closer to 15 billion reais, mainly because relatively few of their former depositors have the will and resources to go to court. Murilo Portugal, head of the Federation of Brazilian Banks (Febraban), which co-ordinates the industry’s legal strategy, counters that between 2005 and 2013, as the 20-year statute of limitations drew near, banks received as many as 1.4m claims. And the court may interpret some pending class actions brought by public prosecutors as representing all of the tens of millions of Brazilians who held a savings account at the time.
February 6, 2014
Rogerio Jelmayer – The Wall Street Journal, 2/6/2014
Brazil’s government is set to name Paulo Rogerio Caffarelli as the No. 2 official at the Finance Ministry as it seeks to improve ties with the business community, according to a person with knowledge of government decisions.
Mr. Caffarelli is currently vice president at Latin America’s largest bank by assets, the government-run Banco do Brasil SA BBAS3.BR +2.13% . He has overseen the bank’s efforts to expand internationally and was also responsible for lending to medium-size and large corporate customers.
Finance Minister Guido Mantega and his team have come in for considerable criticism for their handling of the Brazilian economy, which is entering a fourth year of subpar growth. Inflation remains high and there are concerns that increases in government spending may undermine the country’s investment-grade credit rating.
January 24, 2014
Alonso Soto & Luciana Otoni – Reuters, 1/23/2014
Financial markets are underestimating the speed at which the Brazilian economy could recover in a year that should be less volatile than previous ones, a senior government official told Reuters on Thursday.
Marcio Holland, the finance ministry’s secretary of economic policy, said that an uptick in domestic consumption, record grains output and more infrastructure investment should help the economy grow more this year than last.
The U.S.-trained economist, the ministry’s main forecaster, said financial markets are focusing too much on 2013, which was plagued by market volatility amid talk that the Federal Reserve would withdraw U.S. economic stimulus.
January 24, 2014
Matt Clinch – CNBC, 1/24/2014
It’s the perfect time for investors to lead the charge back into emerging market Brazil, according to the country’s finance minister, who told CNBC that China growth fears have dragged stock prices down to very attractive levels.
Guido Mantega, Brazil’s finance minister, said the county’s stock market has become strongly dependent on China, with its heavy link to commodities. On Thursday, fresh data showed China’s manufacturing activity contracted for the first time in six months in January. Commodities producers drove the country’s Bovespa stock index down following the news.
“Over the last few weeks we’ve heard not very good news on growth rate for China. China has been giving ambivalent signals. So when they give signals like the one they gave yesterday with PMI that dropped a little, our stock market loses some value as a result,” he told CNBC at the World Economic Forum in Davos.
January 23, 2014
Brazilian Finance Minister Guido Mantega said on Thursday that a recent slowdown in price increases in January shows his government is committed to keep inflation under control.
Speaking at a webstreamed press conference from Davos, Switzerland, Mantega said the government has not yet decided on its budget fiscal goal for 2014. Investors are keeping a close eye on the government finances that have quickly deteriorated over the last two years.
January 14, 2014
Blake Schmidt & Josue Leonel – Bloomberg, 1/14/2014
Brazil’s swap rates climbed on speculation among some traders that policy makers convening for a two-day meeting will lift borrowing costs by a half-percentage point for a sixth straight time to curb inflation.
Swap rates on contracts maturing in January 2017 were up for a second consecutive day, rising seven basis points, or 0.07 percentage point, to 12.32 percent at 11:03 a.m. in Sao Paulo. The real depreciated 0.2 percent to 2.3629 per U.S. dollar after rising yesterday to the strongest level this month.
“The market seems to be migrating toward a bet on a rate hike of 50 basis points,” Daniel Weeks, the chief economist at Garde Asset Management in Sao Paulo, said in a phone interview.
December 2, 2013
Brazil’s inflation may slow to 4 percent on average over the next 10 years, Finance Minister Guido Mantega said on Monday at a seminar in Sao Paulo.
The government targets annual inflation at 4.5 percent, with a tolerance margin of 2 percentage points either way. In the 12 months through October, consumer prices as measured by the benchmark IPCA index rose 5.8 percent.
Mantega added that Brazil’s economic growth will likely accelerate to between 3.6 and 4 percent on average from 2013 to 2022 as the government focuses on boosting investments.
December 2, 2013
Press TV, 12/01/2013
Marcel Fiche’s resignation was announced by the office of Finance minister Guido Mantega on Saturday.
The decision to step down follows reports that Fiche and his technical advisor allegedly received about USD 25,700 from a communications company in exchange for a contract with the finance ministry.
“I have asked Minister Guido Mantega that I not return to cabinet at the end of my vacations,” Fiche stated in a statement on Friday.
Fiche also said the allegations against him were “lies,” adding that he wanted to contribute to a smooth and rapid investigation.
November 4, 2013
Adriana Arai, Marisa Castellani & Arnaldo Galvao – Bloomberg, 11/04/2013
Brazil plans to reduce lending by its development bank by about 20 percent next year to shore up finances after posting the biggest budget deficit in almost four years, fueling speculation the nation’s credit rating may be cut. Local swap rates fell.
Finance Minister Guido Mantega said in an interview that state lender BNDES will provide about 150 billion reais ($66.6 billion) in new loans in 2014, compared with an estimated 190 billion reais this year. That would bring BNDES credit a little below 2012 levels. The government will freeze BNDES lending to states and municipalities, unwind tax breaks on consumer goods and keep current expenditures under control, the minister said.
“With respect to state banks, we will reduce stimulus,” Mantega said at his Sao Paulo office on Nov. 1. Lending “will be more focused and we will reduce subsidies.”