April 10, 2014
Luciana Magalhaes & Rogerio Jelmayer – The Wall Street Journal, 4/9/2014
Brazilian Finance Minister Guido Mantega blasted critics of his country’s World Cup preparations and vowed that Brazil’s economy would revive from its lethargy, for which he mainly blamed outside forces.
“I believe that the Cup is being politicized,” Mr. Mantega said in an interview with The Wall Street Journal in New York before attending a gathering of the International Monetary Fund. “For Brazil to host the Cup, it needs to meet FIFA’s requirements for a certain numbers of stadiums and seats, and that is being done,” he said, referring to the world soccer governing body.
March 20, 2014
The Economist, 3/18/2014
BRAZIL’S government has been trying hard of late to burnish its economic credentials, dented by years of perceived interventionism, weak growth and high inflation. In February the president, Dilma Rousseff, sweet-talked investors in Davos for the first time since she took office in 2011. Later that month her finance minister, Guido Mantega, presented a revised budget for 2014, with 44 billion reais ($19 billion) in cuts and a target for the primary surplus (ie, before interest payments) of 99 billion reais, or 1.9% of GDP.
In the past few days, however, the government’s credibility has taken a knock. First, on March 13th, Mr Mantega conceded that the 9 billion reais set aside to prop up electricity utilities, reliant on hydropower but forced by lack of rain to tap pricey thermal plants, would not be enough. Another 12 billion reais would be needed, he said.
The Treasury would stump up 4 billion reais, financed in part by raising already-high taxes. The remaining 8 billion reais is to come from bank loans to the Electrical Energy Commercialisation Chamber (CCEE), a clearing house for the electricity market. The cost would be passed on to consumers, albeit only after the general election in October. Why private banks would lend that sort of money to a private entity with no assets to speak of is unclear. State-controlled lenders may end up having to step in, ultimately putting the government on the hook.
March 18, 2014
Kasia Klimasinska & Raymond Colitt – Bloomberg Businessweek, 3/17/2014
U.S. Treasury Secretary Jacob J. Lew discussed ways to expand trade and investment with his Brazilian counterpart as he sought to repair ties with Latin America’s biggest economy.
“Both countries recognize the great potential benefit from working together to meet the challenges of generating jobs, sustaining growth and helping support macroeconomic stability,” Lew said after meeting with Brazilian Finance Minister Guido Mantega yesterday in Sao Paulo. He said U.S. companies are seeking to provide financing and expertise for Brazil’s plans to modernize infrastructure.
Lew, in his first Latin American trip since he took office a year ago, also met with Brazilian central bank President Alexandre Tombini before traveling to Mexico City, where he will hold talks today with President Enrique Pena Nieto and top economic officials. He also discussed the crisis in Ukraine and highlighted the need for the U.S. to pass legislation to expand the voting rights of emerging markets in the International Monetary Fund.
February 21, 2014
Brazil January’s current account deficit was the biggest ever posted, central bank data showed on Friday, the latest evidence of the rapid deterioration of its balance of payments as Brazilians continue to spend heavily on imports and trips abroad.
The commodities’ powerhouse posted a current account deficit of $$11.591 billion in January, slightly above the previous monthly deficit record of $11.350 billion recorded in January of last year.
The country had been expected to post a deficit of $11.7 billion, according to the median forecast of 20 analysts in a Reuters survey. Brazil’s current account deficit in December was $8.67 billion.
February 21, 2014
Samantha Pearson – The Financial Times, 2/20/2014
Brazil has promised to cut $18.5bn in public spending, as a former star of emerging markets struggles to win back investors’ trust.
After cancelling his trip to the Group of 20 meeting in Australia this weekend, in order to finalise the country’s fiscal policy, Guido Mantega, Brazil’s finance minister, announced a new primary surplus goal of 1.9 per cent on Thursday.
To meet this target, the government will have to slash R$44bn ($18.5bn) from the budget planned for this year, relying heavily on cuts to discretionary spending in Congress.
February 20, 2014
Walter Brandimarte – Reuters, 2/18/2014
A former director at Brazil’s central bank said he expects President Dilma Rousseff to make key changes in macroeconomic policy, including cuts in government spending, if she gets re-elected for a second term later this year.
Paulo Vieira da Cunha, who was on the bank’s board from 2006 to 2008, said he also expects that after the election Rousseff will replace Finance Minister Guido Mantega, who has been heavily criticized by investors for overly optimistic economic forecasts and what they see as accounting gimmicks in the country’s budget.
Vieira da Cunha called for a return to the pragmatic style of former President Luiz Inacio Lula da Silva, who was elected as a left-winger but was widely regarded as a pro-growth and pro-business president.
February 19, 2014
Brazilian Finance Minister Guido Mantega canceled his trip to the Group of 20 meeting in Australia this week to hammer out the final details of Brazil’s key fiscal goal for the year, a government official told Reuters on Tuesday.
President Dilma Rousseff’s government is expected to announce this week its 2014 primary budget surplus goal, a gauge of its fiscal discipline that is key to efforts to recover credibility in its economic policies.
The primary surplus is the excess revenue before the payment of interest on debt.
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 29, 2014
Carla Simoes & Arnaldo Galvao – Bloomberg, 1/28/2014
Morgan Stanley’s report calling Brazil’s real one of the “fragile five” currencies amid an emerging market selloff is groundless, Finance Minister Guido Mantega said.
Near record-high international reserves, a solid fiscal situation, a floating exchange rate and a sound financial system will allow Brazil to weather volatility as the U.S. reduces monetary stimulus, Mantega said yesterday in an interview from his office in Brasilia.
Morgan Stanley coined the phrase “fragile five” last year to describe Brazil, India, Indonesia, Turkey and South Africa, recommending investors bet against their currencies because of wide current account deficits and fast inflation. HSBC Group last week forecast Latin America’s biggest economy will have its credit rating downgraded in 2014 because of increased public spending and weak growth.