Brazil to eliminate payroll tax on bus fares – finance minister

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.

Read more…

Brazil freezes $13.7 billion from budget to meet fiscal goal

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.

Read more…

Brazil throws troubled ethanol industry tax breaks, credit

Alonso Soto, Reese Ewing – Reuters, 04/23/2013

Brazil’s government threw its sugar-ethanol industry a lifeline on Tuesday, by cutting taxes and sweetening credit for the struggling sector it hopes will resume investments in new biofuel plants to bolster output.

Finance Minister Guido Mantega, who announced the measures, said he expected a recovery in the ethanol industry could also help curb stubborn consumer inflation by bringing down fuel prices and reducing Brazil’s dependence on gasoline imports.

The reduction of the so-called PIS/Cofins – payroll and social security taxes – and interest rates on loans is expected to help ethanol groups such as Louis Dreyfus, Bunge , Cosan and others offset production costs that have risen steadily in the last decade.

Read more…

Fraga says he’s disturbed by Brazil’s focus on consumption

Julia Leite, Blake Schmidt – Bloomberg, 04/22/2013

Arminio Fraga, Brazil’s former central bank president, is concerned by the government’s push to foster growth by encouraging consumers to spend more on credit.

The speed of loan growth in Brazil merits “some monitoring,” Fraga, founder of Gavea Investimentos Ltda., said in remarks at an event organized by the Brazilian-American Chamber of Commerce in New York. Brazil is using state-owned banks aggressively to promote its goals, said Fraga, who was president of Brazil’s central bank from 1999 to 2002.

“The excessive emphasis on consumption disturbs me,” Fraga, 55, said. “You’re borrowing a lot now, but time will come that people will have to pay. You need to do some things on the fiscal and monetary front and also pay attention, with a prudential mindset, keeping an eye on what these loan portfolios look like.”

Read more…

Analysis: Brazil’s Rousseff not a slam dunk for re-election

Brian Winter – Reuters, 04/04/2013

She’s one of the world’s most popular presidents with an approval rating that is the envy of her peers in richer countries struggling with debt crises and political deadlock – 79 percent and rising.

She presides over a country with record-low unemployment, a can-do optimism that invites comparisons to the post-war years in the United States, and a chance to showcase its progress when it hosts the soccer World Cup next year.

And yet, it’s entirely possible that Dilma Rousseff could fail to win re-election as president of Brazil in October 2014.

The 65-year-old leftist remains the clear favorite but the threat of rising inflation and unemployment, a trio of attractive opposition candidates, and the possibility of an embarrassing logistical debacle at the World Cup mean that Rousseff is less of a shoo-in than many observers think.

Read more…

Brazil central bank admits difficulty in taming stubbornly high inflation

MercoPress, 04/04/2013

The Central Bank is monitoring the evolution of the economic scenario to evaluate the need for other measures to battle inflation,” Tombini said.

He said the Central Bank will analyze upcoming inflation data for March to decide on future steps.

Annual inflation in the month to mid-March climbed to 6.43%, dangerously close to the ceiling of the official target range of 6.5%. Economists have raised their forecasts for inflation, suggesting policymakers will need to raise interest rates to keep price expectations under control.

Read more…

Brazil Central Bank sees high inflation for next 2 years

Alonso Soto & Asher Levine, 03/28/2013

Brazil’s central bank said on Thursday it expects inflation to remain relatively high in the next two years, raising its forecasts closer to the ceiling of the official target range, but it stopped short of signaling an imminent rate increase.

The bank’s quarterly inflation report confirmed market expectations that inflation is quickening despite slower growth in Latin America’s largest economy, a political liability for President Dilma Rousseff who must campaign for re-election next year.

Inflation hovering well above the center of the official annual target range of 4.5 percent, plus or minus two percentage points, has raises pressure on Brazilian policymakers to curb price pressures soon.

Read more…

Brazil swap rates rise as inflation accelerates; real advances

Bloomberg – Gabrielle Coppolla & Josue Leonel, 03/08/2012

Brazil`s swap rates climbed to a eight-month high as a report showed annual inflation accelerated in February, fueling speculation the central bank will lift borrowing costs this year.

The real rallied to its highest level since May on speculation the central bank will let the currency appreciate to contain inflation. The government’s IPCA index of consumer prices climbed 6.31 percent in February from a year earlier, the highest annual rate in 14 months. The median forecast of economists surveyed by Bloomberg was for a 6.20 percent pace.

“IPCA has been surprising the market, and it shows that there’s a significant inflation risk,” Roberto Padovani, the chief economist at Votorantim CTVM in Sao Paulo, said in an telephone interview. “The increase may prompt the central bank to raise rates in April.”

Read more…

Brazil’s Real stronger as inflation worries ease

Luciana Magalhaes – The Wall Street Journal, 02/28/2013

Brazil’s real opened stronger against the U.S. dollar Thursday following Brazil’s government efforts to reduce inflation worries.

The real was trading at BRL1.9667 to the U.S. dollar, stronger than Wednesday’s closing price at BRL1.9722, according to Tullett Prebon via FactSet.

Brazil’s high inflation rate scared away private investors in the past, but the current macro-economic stability in the country favors an increase in private investments, President Dilma Rousseff said Wednesday.

Read more…

Brazil Finance Minister Mantega: inflation control a priority

Paulo Trevisani & Paulo Winterstein – Fox Business, 02/26/2013

Brazil Finance Minister Guido Mantega said Tuesday that inflation control is a  priority and so despite a slowdown in inflation the government won’t be  complacent in monitoring prices.

“Inflation control is a priority . . . so we will never relax with inflation  control,” Mr. Mantega said during a presentation to investors in New York.

“Inflation is slowing down but we will not be lax,” he said, citing the IPC  consumer price index, which slowed yet again during the third week of  February.

Read more…