Brazil president says to maintain oil rules, national content

Reuters, 05/14/2015

May 14 Brazilian President Dilma Rousseff said on Thursday that her government will maintain rules that mandate production-sharing contracts for the country’s most promising areas and high national content requirements for the oil industry.

“The local content policy is not something that can be set aside, it is central to my policy of reviving our country’s investment capacity,” Rousseff said at the christening of an oil tanker at the Atlântico Sul Shipyard near Recife, Brazil.

“We are going through a period of macroeconomic difficulty, but today things are different because we have these shipyards.”

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Brazil president says to maintain oil rules, national content

Brazil: Oily mess

Joe Leahy – The Financial Times, 05/14/2015

In Brazil’s hyper-consumerist society, people are accustomed to paying for everything in instalments, from fridges and televisions to silicon breast implants. But less commonly known is that even bribes to political parties can allegedly be paid parcelado, as the practice of paying in instalments is called.

That is what Augusto Ribeiro de Mendonça Neto, a former board member of oil and gas services company Toyo Setal, claimed in testimony in March. He alleges that he paid bribes to the ruling centre-left Workers’ party, or PT, between 2010 and 2013 in exchange for winning contracts with state-owned oil company, Petrobras.

The allegations form part of an investigation into a vast corruption scandal at Petrobras known as “car wash”. As part of the probe, Mr Mendonça told prosecutors that João Vaccari Neto, former PT treasurer, asked him to disguise the bribes as payments to a printing and advertising company named Editora Gráfica Atitude.

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Brazil: Oily mess

IMF Says Brazil Must Pursue Austerity, Meet Targets

Paulo Trevisani – The Wall Street Journal, 5/12/2015

BRASÍLIA—Brazil’s government needs to implement its plans to improve its financial situation and bring price increases under control to help restore confidence, competitiveness and growth to the economy, the International Monetary Fund said in a report published Tuesday.

“Fiscal consolidation should proceed without delay along the announced lines, while monetary policy should remain tight to bring inflation to target,” the report said.

Finance Minister Joaquim Levy, who took office in January, is pushing spending cuts and higher taxes to plug a budget hole caused by years of costly economic stimulus.

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IMF Says Brazil Must Pursue Austerity, Meet Targets

Carlyle’s Rubenstein: Brazil best, despite problems

Lawrence Delevigne – CNBC, 5/12/2015

Once an investor darling, Brazil is hardly a consensus target for international cash today.

High inflation, a sluggish economy and a massive corruption scandal at state energy company Petrobras have caused many investors to flee. But others are sticking with the beleaguered South American country.

One example is $193 billion private equity giant Carlyle Group. Co-CEO David Rubenstein thinks Brazil is actually the most appealing market for investment after the U.S., Europe and China, according to remarks made Tuesday at the Global Private Equity Conference in Washington, D.C.

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Carlyle’s Rubenstein: Brazil best, despite problems

Brazil Witness Alleges Politicians Knew About Alleged Petrobras Scheme

Luciana Magalhaes and Will Connors – The Wall Street Journal, 5/11/2015

CURITIBA, Brazil—A convicted money launderer at the heart of an investigation into an alleged corruption scheme at Brazil’s state-run oil company Petroleo Brasileiro SA alleged President Dilma Rousseff and former President Luiz Inácio Lula da Silva knew about the alleged scheme.

Alberto Youssef, a currency dealer who was convicted of money laundering and sentenced last month to three years in prison, made the allegations to a congressional commission investigating the alleged corruption at Petrobras. Mr. Youssef had previously made the allegations to investigators as part of a plea deal for a lesser sentence.

When asked by lawmakers Monday if Ms. Rousseff and Mr. Lula da Silva, along with other top government officials, knew of the alleged scheme, Mr. Youssef said, “It is my understanding that [they] knew everything.”

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Brazil Witness Alleges Politicians Knew About Alleged Petrobras Scheme

Brazil must face consequences of an unravelling political system

Paulo Sotero – Financial Times, 5/12/2015

The severity of the crisis that has engulfed Brazil in the early part of President Dilma Rousseff’s second term has generated an unusual degree of candour among officials and politicians.

“State capitalism does not work well in a democracy,” said finance minister Joaquim Levy after the gigantic March 15 street protests that revealed the extent of popular anger caused by the nation’s reversal of fortunes, and turned Ms Rousseff into a highly unpopular and isolated leader less than six months after her re-election.

Mr Levy was referring to the part of the crisis he is in charge of fixing: the debilitating effects of large-scale state intervention in the economy during Ms Rousseff’s first term. It turned fiscal surpluses into deficits, brought inflation back, compromised investors’ confidence and threw the nation into a recession expected to last for a while. Mr Levy’s task is probably the easier one.

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Brazil must face consequences of an unravelling political system

Levy Faces Biggest Test as Time Runs Out in Brazil Congress

Raymond Colitt and Arnaldo Galvao – Bloomberg Business, 5/11/2015

Brazil’s Finance Minister Joaquim Levy is up against a ticking clock to convince reluctant legislators to push austerity measures through Congress.

Two decrees that cut social-security spending by as much as 14.5 billion reais ($4.74 billion) lapse June 1 if they don’t pass Congress. A separate bill to raise 12.8 billion reais in corporate-payroll taxes this year has stalled, meaning the government is being denied the projected revenue.

A standoff last week over unemployment benefits reflects the reluctance inside President Dilma Rousseff’s coalition to pay the political price for shoring up Brazil’s public coffers. That, and a Senate chief critical of the proposals, will put Levy’s savvy to its biggest test yet, said Brasilia-based political analyst Andre Cesar.

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Levy Faces Biggest Test as Time Runs Out in Brazil Congress