Joe Leahy – The Financial Times, 7/26/2015
Brazil’s economy may be in freefall but until recently its hard-pressed citizens could at least count on the unwavering commitment of their famously hawkish finance minister to limit the damage.
Rushed to hospital last month with what local media speculated was a pulmonary embolism, a dangerous condition involving bloodclotting in the lungs, Joaquim Levy nevertheless embarked a few hours later on a flight to New York to tout Brazil to potential investors.
So when Mr Levy announced last week he was backpedalling on one of his key promises — to quickly restore Brazil’s sinking public finances to good health — markets reacted with surprise.
Reese Ewing – Reuters, 7/24/2015
Brazil’s real fell on Friday to its weakest against the dollar in 12 years, slipping quickly in early trade to 3.334 to the dollar.
The slide in the local currency comes after Brazilian Finance Minister Joaquim Levy announced on Wednesday the government would slash its primary surplus target due to deteriorating tax revenues amid Brazil’s deepening economic slump.
Mario Sergio Lima, Arnaldo Galvao and David Biller – Bloomberg Business, 7/23/2015
Finance Minister Joaquim Levy’s proposal to reduce Brazil’s budget savings reflects the hard reality that a contracting economy has forced the government to scale back its ambitions for fiscal retrenchment.
Levy said he is targeting a fiscal surplus that excludes interest payments equal to 0.15 percent of gross domestic product this year, a sharp reduction from his original aim of 1.1 percent. He will freeze an additional 8.6 billion reais ($2.7 billion) in spending to meet the new target.
“The objective is to reduce uncertainty in the economy by announcing the target we consider achievable, adequate, certain, given the scenario we currently face,” the minister, nicknamed Scissorhands for his propensity to cut expenditures, told reporters.
Nicolas Bourcier – The Guardian, 6/9/2015
The signs that Brazil’s economy is in trouble have been visible for a while now, but the worst could be still to come. The figures published last month for gross domestic product in the first quarter of 2015 confirmed the absence of growth that has plagued Latin America’s powerhouse for the past five years.
With GDP down by 0.2% since the new year – a fall of 1.6% compared with the same period of 2014 – Brazil has registered its worst result in six years. Even if it has actually fared better than the 0.5% drop forecast by the markets, the outlook for the world’s seventh-largest economy nevertheless looks gloomy. The figures are bad enough to reduce the already limited room for manoeuvre available to the newly appointed and ever so orthodox finance minister, Joaquim Levy. Last month he announced far-reaching austerity measures, with cuts amounting to 69.7bn reals ($22.4bn), prompting an outcry from members of his own party, who want a more flexible line.
The government led by President Dilma Rousseff is expecting a 1.2% fall in GDP, higher than the 1% forecast by the International Monetary Fund. If the first forecast is right, it would be Brazil’s worst performance in the past 25 years. “Everyone was hoping that the economy would bottom out in the first quarter,” says economist Paulo Gala, “but confidence is still deteriorating, [and] the volume of road transport is plummeting, as are car sales. The recession seems to be deepening.”
Kenneth Rapoza – Forbes Magazine, 5/25/2015
Brazil’s federal budget needed some slicing and dicing in the financial editing rooms in the capital city last month because it was “nowhere close” to reality, Finance Minister Joaquim Levy said on Monday.
The Brazilian economy is going through a serious economic correction. With the commodity super cycle over, Brazil got hammered by keeping rates artificially low for too long in the first term of president Dilma Rousseff. At the time, the government was fighting a “currency war” against a weak U.S. dollar that led to hot money flowing into Brazil’s currency and debt markets. A stronger currency didn’t match the fundamentals of a weakening economy, cutting Brazil out of some competition in foreign markets, and leading to an increase in imports as local manufacturers could not compete with similar product makers abroad. Inflation rose. The economy slowed even more. Now there’s hell to pay. And Brazil’s FinMin is taking a battle ax to the government’s planned budget, released last month.
Levy said the latest round of budget cutbacks is due to a shortfall in revenues.
Kenneth Rapoza – Forbes, 4/19/2015
Brazil’s most trusted official, Finance Minister Joaquim Levy, says beleaguered oil giant Petrobras has turned the page. And the upcoming release of Petrobras earnings will prove it.
“Petrobras has given us signs of reorienting itself to some degree, in certain segments of its business, in a way that is strategically forward looking. They changed management. They renewed the board of directors,” he said in an interview with Brazilian journalists this weekend.
What he said is nothing new. The market knows about new management, and of Petrobras asset sales. But what investors may read here in the tea leaves is that Levy is confident that Petrobras will produce its much-anticipated earnings report. Supposedly the board of directors will agree on a publishing date on Wednesday, April 22.
Kenneth Rapoza – Forbes, 4/1/2015
Bloomberg gives us Brazil watchers some good news: beleaguered president Dilma Rousseff is not going to sack Joaquim Levy, the country’s newly appointed Finance Minister.
“Levy is very important for Brazil today and he stands very firm,” she said in a Bloomberg interview in Brasilia. There has been a lot of speculation of late that Levy, a former Treasury secretary and asset manager at Bradesco, would be forced to resign.
Levy is the hand picked FinMin of Dilma’s predecessor and Workers’ Party strongman Luiz Inacio Lula da Silva. Levy represents Lula’s pragmatic capitalism, which is not who Dilma is. Dilma is more of a technocrat who believes the government, her government, knows exactly what it is doing.