Paulo Sotero – Brazil Institute, 04/13/2016
The loss of support to President Dilma Rousseff intensified after the Chamber of Deputies special committee approved, on April 11, a motion to move forward with impeachment proceedings against the embattled Brazilian leader. The action is grounded on evidence that Rousseff’s government manipulated budget accounts and made unauthorized expenditures to hide an exploding fiscal deficit at the root of the country’s ongoing economic disaster.
The impeachment process has been fueled by revelations of the ongoing investigation of a $3 billion corruption scandal involving state oil giant Petrobras, Brazil’s largest company. The crimes, exposed by multiple defendants through plea bargain agreements with federal authorities, started during the administration of popular former president Luiz Inácio Lula da Silva and continued under Rousseff. Prior to being elected president, Dilma Rousseff was minister of energy and chaired the Petrobras board of directors for five years. Although the president has not been charged in the Petrobras case, politicians closely associated with her have been arrested and accused of a variety of crimes. And she may be charged with obstruction of justice for trying to shield Lula from a criminal investigation related to Petrobras by naming him to her cabinet.
Following last month’s decisive break between the Brazilian Democratic Movement Party (PMDB), Brazil’s largest party, and the government, other members of Rousseff’s fraying coalition have cut ties with the unpopular president, leaving her increasingly isolated to face the Chamber of Deputy plenary vote on impeachment, scheduled for April 17. Her survival depends on ensuring the allegiance of members of small parties who are driven by their interests in accessing federal agencies budgets and patronage jobs.
Paula Sambo – Bloomberg, 04/11/2016
Brazil’s real advanced on growing speculation the ouster of President Dilma Rousseff is drawing closer as Congress prepared for key votes on the process this week.
Brazil’s currency, the most volatile in emerging markets as traders try to gauge the outlook for a complicated impeachment effort, gained 0.5 percent to 3.5742 per dollar at 9:21 a.m. in Sao Paulo. The real was the world’s best performing currency in the first quarter on wagers that bringing in a new government will help pull Brazil out of its worst recession in a century and shore up a record fiscal deficit.
Newspaper O Estado de S.Paulo reported more lawmakers are in favor of removing Rousseff as a special committee in the lower house was scheduled to vote Monday on whether to move forward with the impeachment request. The full house could vote as early as April 17, either squelching impeachment or setting the stage for Rousseff’s ouster in the Senate. The real tumbled last year as Brazil lost its coveted investment-grade status and a sweeping corruption scandal hit businesses and the government.
Silvio Cascione and W Simon – Reuters, 04/04/2016
Politicians from seven parties in Brazil were named as clients of a Panama-based firm at the center of a massive data leak over possible tax evasion, O Estado de S.Paulo said on Monday.
The newspaper was one of more than 100 other news organizations around the globe to publish this weekend details of more than 11.5 million documents from the files of law firm Mossack Fonseca, based in the tax haven of Panama.
O Estado said names in the leaked files included politicians from Brazil’s largest party, the PMDB, which broke away from President Dilma Rousseff’s coalition last week. Political figures from the PSDB, the most prominent opposition party in the country, was also mentioned in the leaks, as well as others from the PDT, PP, PSB, PSD and the PTB parties.
Financial Times – Joe Leahy, 04/01/2016
Brazilian prosecutors have filed corruption charges against billionaire Joseph Safra, said by Fortune magazine to be the world’s richest banker, and five others for involvement in an alleged scheme to pay off government tax auditors.
The financier, who owns London’s Norman Foster-designed “Gherkin” skyscraper, is alleged to have known of a plan by executives at his banking group in Brazil to pay R$15.3m in bribes to help reduce tax debts today amounting to R$1.8bn.
“The criminal intentions of the group is made clear by the various conversations and exchanges of messages cited in the indictment,” the prosecutors said in a statement signed in Brasília.
Katy Barnato – CNBC , 03/29/2016
Brazil’s political system is set to spin further out of control Tuesday as the biggest party in the Senate quits the ruling coalition, a move that will hike the odds on President Dilma Rousseff’s impeachment.
The Brazilian Democratic Movement Party (PMDB) announced Tuesday, as expected, it would pull six ministers from Rousseff’s Cabinet, ordering them to either resign or face ethics proceedings, Reuters reported Tuesday. If Rousseff is impeached, it would put Vice President Michel Temer, leader of the PMDB, next in line for the presidency, Reuters said.
Analysts are divided as to how Brazil’s economy and political situation might fare in the wake.
David Biller – Bloomberg, 03/28/2016
Brazil analysts trimmed their 2016 inflation forecast after price increases slowed more than all analysts expected in March and the economy showed signs of a deeper contraction.
Economists lowered their 2016 inflation forecast to 7.31 percent, from 7.43 percent previously, according to the weekly Focus survey conducted March 24. They also pared their 2016 economic outlook to a recession of 3.66 percent, and lowered their 2017 growth forecast to 0.35 percent from 0.44 percent the prior week.
Brazil’s inflation in the 12 months through mid-March fell more than all economists forecast, making its return to single digits for the first time since October. The currency this month also gained most among 16 major currencies as the market gauged a greater probability President Dilma Rousseff will be impeached. While markets responded positively to the political strife engulfing the capital, it is weighing on the outlook for economic rebound.
Fernando Canzain – Folha de Sao Paulo, 03/24/2016
With the political and fiscal crises that started last year, Brazil is undergoing a combination of income decline and an increase in inequality for the first time since 1992. According to specialists, there have been instances where income and inequality have worsened separately, but this is the first time in which both deteriorated simultaneously.
Unemployment, inflation, decline in investment and the fiscal crisis caused a series of negative consequences which eventually started to affect the social disparities across the country. Economists say that until 2014, Brazil had a surprising increase in income and decrease in inequality, even with all the macroeconomic problems. Yet, the recession makes these consequences inevitable, and with an expressive decrease of 3.2% in income per capita there exists the necessity for national economic readjustment.
Summarized by: Julia Fonteles and Therese Kuester
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