When Vale agreed to settle multi-billion dollar tax claims this week, Brazil’s President Dilma Rousseff must have breathed a huge sigh of relief.
After all, she really needs the cash. That became more evident than ever on Friday when the country posted its smallest primary budget surplus for the month of October on record.
Central bank data showed a primary budget surplus of only R$6.2bn ($2.7bn) last month – the lowest figure for October since authorities started tracking the data in 2001 and far below economists’ median estimate of R$9.75bn, according to Reuters.
While that came as a nasty surprise it was not totally unexpected. Brazil’s public finances have been deteriorating for a while as the government remains reluctant to reduce spending ahead of presidential elections next year.
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Brazil’s central bank has increased its benchmark interest rate by 50 basis points to 10 per cent, as expected.
Here’s the accompanying statement:
Giving continuation to the adjustment of the benchmark interest rate, which began with the meeting in April 2013, the Copom (central bank’s monetary policy committee) decided unanimously to raise the Selic rate to 10 per cent a year, without bias.
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Well, it was fun while it lasted, but it seems that Brazil’s brief affair with low interest rates is over. The country’s central bank is widely expected to raise the benchmark Selic rate by 50 basis points to 10 per cent late on Wednesday, pushing it back into double digits for the first time since March of last year.
The move in itself is welcome — 12-month inflation in the month to mid-November came in at 5.78 per cent. That may be better than previous months, but it is still a long way off the country’s 4.5 per cent target.
However, Brazil’s monetary policy U-turn does raise several questions. Continue reading »
Brazil’s government sure knows how to keep investors on their toes. In an interview with Spain’s El País newspaper, President Dilma Rousseff dropped the following bombshell: Brazil actually grew 1.5 per cent last year, not the reported 0.9 per cent. Continue reading »
It’s going to be a nail-biting few days ahead for Petrobras’s investors, Brazil’s ethanol industry and anyone with a car in the Latin American country.
Next Friday at Petrobras’s board meeting, the government is set to decide on whether to increase fuel prices in the country and, more importantly, whether to keep prices in line with international levels in the future. Continue reading »
There are only so many televisions, washing machines and new cars Brazilians can buy. After propelling Brazil’s economy for the past few years, retail sales in the country have shown further signs of slowing.
Sales in the sector rose 4.1 per cent in September from a year earlier, according to data released on Wednesday. While that ranked as the seventh straight month of expansion, the figure was far below the 6.2 per cent annual growth rate in August and also below analyst estimates. Continue reading »
If it’s not iron ore, then Vale is not interested, it seems. In its latest attempt to slim down and rid itself of non-core assets, the Brazilian miner said on Monday that it will sell at least half of its stake in Norway’s aluminium producer Norsk Hydro. The sale could fetch as much as $1.1bn. Continue reading »
Given all the concern over government intervention in Brazil’s economy recently, the following piece of news came as a pleasant surprise on Friday morning.
The Brazilian government has raised the maximum stake that foreign investors can hold in the country’s largest state-controlled bank, Banco do Brasil, to 30 per cent from 20 per cent previously. The limit was last raised from 12.5 percent in September 2009. Continue reading »
The OECD has one key piece of advice for Brazil’s government when it comes to monetary policy: let the central bank do its job.
While praising Brazil for reducing poverty and inequality, the OECD said in its report on Tuesday that the country must build confidence in its macroeconomic policies by tightening monetary policy and improving the credibility of the central bank. Continue reading »
Going, going, gone! After months of hype, excitement, protests, and lawsuits, Brazil finally auctioned off its biggest ever oil discovery on Monday – the Libra field.
‘Auction’, however, is perhaps a misleading term. There was only one bidder – a consortium made up of Brazil’s state-run Petrobras (40%), Anglo-Dutch Shell (20%), France’s Total (20%), and China’s CNPC (10%) and CNOOC (10%). Continue reading »
It’s the big question in the telecoms industry right now – will Telecom Italia sell its controlling stake in Brazilian mobile carrier Tim Participações?
After being downgraded to junk on Tuesday by Moody’s, the Italian operator sure needs the cash. And Spain’s Telefónica, which struck a deal last month to secure control of Telecom Italia, is believed to be firmly in favour of offloading the Brazilian unit. But who would buy it? Continue reading »
Brazil’s central bank has increased its benchmark interest rate by 50 basis points to 9.5 per cent, as expected. Continue reading »
All eyes are on the central bank in Brazil on Wednesday as the market counts down to the latest interest rate decision. But this time it’s not so important what policymakers say but how they say it. Continue reading »
OGX shareholders should be used to violent swings in the market by now. Shares in Eike Batista’s oil company are down more than 90 per cent this year. However, even by OGX standards, the last few days have been a rollercoaster for investors.
The stock gained as much as 49 per cent on Friday after OGX exercised a put option under which Batista would begin to pump as much as $1bn into the company through the purchase of new shares. On Monday shares fell over 17 per cent after Batista contested the decision to exercise the put. Continue reading »
It’s one of those questions guaranteed to get everyone from homeowners to government officials hot and bothered: is there a real estate bubble in Brazil?
With memories still fresh of the housing market collapse in the US, among other countries, many have pointed to the sharp rise in Brazilian real estate prices over the past few years as evidence of a bubble. There are even entire websites dedicated to the subject.
However, the debate returned to the headlines this week after Yale University’s Robert Shiller, widely known for predicting the US housing crash, weighed in on the issue during an event in Campos do Jordão. Continue reading »