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.
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 10, 2014
Samantha Pearson – The Financial Times, 1/9/2014
Plastered across shop windows along São Paulo’s main Paulista Avenue this week is one word: ‘liquidação’ (sale). Stores in Brazil’s biggest city are offering discounts of up to 90 per cent as they frantically try to clear stock after the worst Christmas in a decade.
“The whole family spent less on presents this year – in fact, we cut back on pretty much everything,” says Maria Germano de Oliveira, an office cleaner, glancing through one shop window as she hurries to work.
Retail sales during the week before Christmas rose 2.7 per cent – the lowest increase since 2003 as inflation and rising debt levels scared away customers, according to Serasa Experian, a credit consultancy.