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.

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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.

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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.

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Brazil postpones until next year increases in car sales taxes to help the economy

MercoPress/South Atlantic News Agency, 04/02/2013

The IPI tax on manufactured products was reduced last year for vehicles as part of a barrage of tax breaks and other stimulus measures by President Dilma Rousseff’s government to restore life to a flagging economy.

The tax on vehicles was reintroduced this year and the government planned to restore the levy to previous levels, but weak vehicle sales led it to put off the plan.

Finance Minister Guido Mantega said the government wanted to “avoid the risk of a drop in sales throughout the year.”

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Factbox: five big decisions facing Brazil’s Rousseff

Anthony Boadle - Reuters, 03/04/2013

Just past the mid-point in her first term, Brazilian President Dilma Rousseff faces several difficult economic and political decisions that will define the rest of her presidency:

1) GO FOR DEEPER TAX REFORM?

Rousseff has acknowledged the need to overhaul Brazil’s tax system, which is considered by the World Bank to be the world’s most complex. But she has so far opted for targeted tax cuts – in part because she doesn’t think she can push a broader reform through Congress and its 24 squabbling political parties.

Could she reconsider in 2013? Any early signs of another weak economic performance this year could lead Rousseff to become more aggressive on the tax front. Alternatively, she could stick with piecemeal changes, such as the current proposal to cut the ICMS tax on inter-state commerce and the planned change to simplify the so-called PIS/Cofins taxes that companies pay on sales receipts.

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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.

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Brazil Real closes stronger

Jeff Fick – The Wall Street Journal, 02/27/2013

Brazil’s real closed stronger against the U.S. dollar Wednesday as concerns about local inflation and Italy’s political uncertainties faded.

The real exited active trading Friday at BRL1.9722 to the U.S. dollar, stronger than Tuesday’s closing price fixed at BRL1.9829, according to Tullett Prebon via FactSet.

Brazil’s currency tracked gains by the euro, seen as a key barometer for the real, as global markets rebounded from this week’s selloff on inconclusive results from the Italian elections. Investor appetite for riskier assets such as emerging-market currencies recovered after Italy successfully sold about $8.5 billion of bonds, although at the highest yields since October 2012.

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Mantega says currency war he named eases as Brazil recovers

Andre Soliani & Joshua Goodman, Bloomberg, 02/27/2013

As the currency war intensifies in the developed world, the Brazilian official who coined the phrase says for his country it’s softened.

Brazil succeeded in reducing swings in the real after letting the currency depreciate 19 percent in the two years ending in December to protect local manufacturers from foreign competition, Finance Minister Guido Mantega said in an interview. Now with the real hovering around 2 per dollar, Brazil is abandoning policies to depress the exchange rate even as Japan weakens the yen and the U.S. sticks to policies Mantega has said spurred the start of the currency war.

“We haven’t resolved it, but we neutralized, softened the currency war issue that other countries are facing,” Mantega, 63, said at Bloomberg’s headquarters in New York. “We are in Brazil in a transition to a more solid, competitive and efficient economy.”

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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.

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Brazil swap rates fall on surge in unemployment; real declines

Gabrielle Coppola & Josue Leonel – Bloomberg, 02/26/2013

Brazil’s swap rates dropped as the unemployment rate rose in January more than forecast, bolstering speculation policy makers will refrain from increasing borrowing costs amid tepid economic growth.

Finance Minister Guido Mantega said in New York that February inflation has been more “benign” and that the government has no plans to change the transactions tax known as IOF. The central bank will decide next week whether to hold the target rate at a record low 7.25 percent for a third meeting to support the economy even as inflation has exceeded the 4.5 percent midpoint of its target range for more than two years.

Swap rates on the contract due in January 2015 decreased five basis points, or 0.05 percentage point, to 8.42 percent at 1:43 p.m. in Sao Paulo. The real slid 0.4 percent to 1.9897 per U.S. dollar, paring its advance in February to 0.1 percent.

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