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

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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Brazil’s Government Prods Top Banks to Help Ignite Economy

Rogerio Jelmayer – Fox Business/Dow Jones Newswires, 06/02/2013

An increase in lending is seen as essential if Brazil is to jump-start economic growth. While lending has more than doubled over the past 10 years, the pace of growth fell in 2012 and has been blamed, in part, for disappointing growth in 2012.

In 2012, lending by all banks increased 16.2% to a record of nearly 2.4 trillion Brazilian reais ($1.2 trillion). But that was the lowest expansion in years. By comparison, lending rose 19% in 2011 and 21% in 2010.

Brazilian gross domestic product expanded by only 2.7% in 2011 and by an estimated 1.0% last year. The consensus forecast for 2013 is better at 3.1% but still lags behind developing-country rivals China and India.

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Brazil’s central bank will raise rates next year, if needed – source

Luciana Magalhaes – The Wall Street Journal, 09/18/2012

Brazil’s central bank doesn’t rule out raising its baseline interest rate in 2013 if necessary, to keep inflation within its target range, a person close to the central bank said Tuesday.

“We have an inflation targeting policy. If it becomes necessary, the central bank will raise rates in 2013 to keep the inflation in the target,” said the person, who asked not to be named.

While Brazil’s central bank has most recently been cutting interest rates, many market players are betting that the central bank will have to raise rates in 2013 to tame inflation. But top finance ministry officials have sought to play down any need for rate hikes next year.

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Brazil to boost financing of shipbuilding fund

Reuters, 08/29/2012

The Brazilian government said on Wednesday it will use some of its stake in the country’s largest lender to bulk up financing of shipbuilding projects at a time when infrastructure investments are taking center stage.

Under terms of an executive decree, the Finance Ministry will be allowed to transfer as much as 2.5 billion reais ($1.22 billion) worth of shares of state-controlled Banco do Brasil to the capital of the so-called Naval Construction Guarantee Fund.

In recent weeks, Petrobras, Brazil’s state-controlled oil company, signed contracts with several private sector groups for the construction of nine drilling rigs that will be used to extract oil from deep sea wells off Brazil’s coast.

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Pimco lets Palocci make Rousseff market favorite to succeed Lula in Brazil

Joshua Goodman and Iuri Dantas – Bloomberg, 08/29/2010

Antonio Palocci, who four years ago resigned as Brazil’s finance minister before the Supreme Court belatedly exonerated him of violating bank secrecy laws, can thank Pacific Investment Management Co. for helping him pave the way for Dilma Rousseff’s election as President in October.

Pimco, the world’s biggest bond fund based in Newport Beach, California, has made Brazilian debt its favorite among emerging markets mostly because of its confidence in the 49- year-old Palocci, who is a congressman from Sao Paulo state and the economic adviser to Rousseff. Brazil’s 11 percent bonds maturing in 2040, the benchmark, tripled to 137 cents on the dollar as the yield declined to 7.81 percent since Pimco increased their holdings eight years ago.

“Palocci’s steady hand is what kept us in the trade even after prices started to recover,” said Mohamed A. El-Erian, Pimco’s Chief Executive Officer, who met with Palocci twice following the election of President Luiz Inacio Lula da Silva in 2002. The bond between Lula and Palocci “gave us confidence to develop deep roots” for Pimco, which tripled its Brazil holdings at a point when there was widespread talk of default.

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Brazil’s Finance Minister Guido Mantega

Reuters, 08/24/2010

Key Facts:

– A long-time advocate of more development spending in Brazil, Mantega has presided over the country’s rapid economic rebound from a global financial crisis last year.

– Under his watch, the Finance Ministry took a series of measures to lift Latin America’s largest economy from recession, reducing taxes for key industries as the National Treasury lent billions of dollars to the state development bank BNDES. More recently, Mantega defended the creation of a state insurer to bolster massive investments in infrastructure before the World Cup in 2014 and Olympic Games in 2016.

– Brazil’s economy has rebounded quickly, posting 9 percent annual growth in the first quarter of 2010, its fastest rate in at least 14 years. The rapid growth has cemented Brazil’s position as one of the world’s top emerging economies along with India, Russia and China.

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Brazil triggers talk of action to curb real

Jonathan Wheatley-Financial Times, 11/11/09

Brazil’s finance minister, Guido Mantega, has sparked speculation that his government will introduce further capital controls after declaring that foreign exchange markets have given the real an “exaggerated” valuation.

Brazil last month introduced a 2 per cent tax on foreign portfolio investments to stem the appreciation of the real – which has risen more than a third against the dollar this year – and reduce volatility in exchange rates.

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