Joe Leahy, John Paul Rathbone – Financial Times, 02/08/2016
When Dilma Rousseff attended the 2016 opening session of Brazil’s congress this week, she appealed to lawmakers to approve tax increases to tackle a widening gap in the country’s public finances.
Most critically, the president called for the reintroduction of a tax on financial transactions, known as the CPMF, that was abandoned in 2007 after objections from business. Opposition congressmen booed her.
But with Brazil reporting a budget deficit last year that was the biggest among emerging economies except for Saudi Arabia at over 10 per cent, unpopular measures are needed to save the country from a deepening fiscal hole, analysts say
Silvio Cascione -Reuters, 02/02/16
Brazilian lawmakers return from their annual recess today with an overwhelming list of work to do as the country sinks into a broadening political, economic and health crisis.
And yet expectations about their actual capacity to make 2016 a better year than 2015 could hardly be smaller.
While there is little consensus on the measures needed to fix Brazil’s budget, deputies and senators are set to spend much of their political energy this year arguing about if and how President Dilma Rousseff should be impeached – and a whole new program of economic reforms could be started from scratch.
Alonso Soto – Reuters, 01/29/2016
Jan 29 Brazil’s overall budget deficit soared to a record 613 billion reais ($150.99 billion) in 2015, central bank data showed on Friday, nearly doubling from last year as efforts to rebalance fiscal accounts failed and interest rates shot up.
The budget deficit equaled 10.34 percent of the gross domestic product, nearly five times its shortfall in the 12 months to mid-2011. The deficit mushroomed under President Dilma Rousseff, who took office at the start of 2011.
In comparison, at the height of its debt crisis in 2009 Greece had a deficit of 15.2 percent of GDP.
David Biller – Bloomberg Business, 11/16/2015
Brazil analysts forecast inflation will exceed the 10 percent threshold by the end of this year for the first time in 12 years as the central bank keeps the benchmark rate on hold.
Inflation will accelerate to 10.04 percent by year-end, up from 9.99 percent a week earlier, according to the Nov. 13 central bank survey of about 100 analysts. Consumer price will increase 6.5 percent next year, at the top of the central bank’s target range of 2.5 percent to 6.5 percent.
Brazil’s economy is caught between accelerating inflation and what’s shaping up to be the longest recession since the 1931. The outlook for 2016 inflation has steadily worsened all year, as Finance Minister Joaquim Levy struggles to shepherd fiscal austerity measures through Congress.
Joe Leahy – Financial Times, 9/30/2015
Brazil’s central bank is willing to do whatever is necessary to control inflation while the country grapples with the thorny issue of how to rebalance the nation’s public finances, a senior official has said.
Tony Volpon (pictured), head of international affairs at the central bank, said while tax increases to balance the budget could raise prices, monetary policy would be adapted to ensure that inflation eventually converges to the official target of 4.5 per cent. Annual inflation is currently running at 9.7 per cent.
“I would much rather that we have a sustainable fiscal situation even if that means higher inflationary pressures that we need to control at our end,” said Mr Volpon in an interview at the central bank’s headquarters in Brasília.
Mario Sergio Lima and Matthew Malinowski – Bloomberg Business, 8/17/2015
Brazil analysts forecast that Brazil’s economy faces two straight years of recession for the first time since the Great Depression.
Brazil’s economy will shrink by 2.01 percent in 2015 and by 0.15 percent in 2016, according to the Aug. 14 central bank survey of about 100 analysts. That marks their first forecast for recession next year and compares with the previous week’s predictions of a decline of 1.97 percent in 2015 and flat growth in 2016. The last time the economy shrank for two straight years was in 1930-31.
President Dilma Rousseff is struggling to balance policies aimed at taming the fastest inflation in over a decade while reviving economic growth amid a massive corruption scandal that has complicated relations with Congress. Moody’s Investors Service this month became the second ratings company to cut the country’s sovereign credit rating to the cusp of junk. Protests on Sunday that drew half a million people into the streets will maintain the pressure on a government with record-low popularity ratings.
David Samuels – Star Tribune, 7/31/2015
Brazilians have a self-deprecating sense of national pride. They sheepishly accept Brazil’s inability to join the club of rich and powerful nations with the oft-heard joke that “Brazil is the country of the future … and always will be!”
This national frustration is borne of long experience. Brazil had the world’s fastest-growing economy in the first half of the 20th century, but by the 1970s growth had stalled. As the population boomed, wages fell. Crumbling infrastructure, a protected domestic economy and burdensome regulations made it hard for Brazilian products to compete on the world market. Inferior schools and a weak job market left millions in poverty, and by 1980 Brazil was competing with Haiti for the title of most-unequal country in the world.
Brazil appeared poised to finally shed this reputation as a perennial underachiever in the 1990s, when its leaders implemented smart economic policies. It got its fiscal house in order, and by the 2000s the economy was booming. Wages went up, while inflation and inequality went down. The government expanded social-welfare programs, unemployment fell and millions entered the middle class. Brazil was also lucky, discovering massive oil deposits in its offshore waters. It also played the global public-relations game well, winning both the 2014 World Cup and the 2016 Olympics.