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☆ Brazil's Haddad backs longer-term target for inflation, no talk of goal change
▼ + stars: | 2023-05-05 | by ( ) www.reuters.com time to read: +2 min

BRASILIA, May 5 (Reuters) - Brazilian Finance Minister Fernando Haddad said on Friday that he favored taking a long-term view of inflation and that the central bank could begin cutting interest rates. He added, however, that the government could not pre-empt any decision on changing the inflation targets set by the National Monetary Council consisting of himself, the planning minister, and the central bank governor. "I think continuous inflation targeting is much better than looking at the calendar year," Haddad said in an interview with CBN radio. The central bank, meanwhile, has suggested the discussion may have raised inflation expectations, requiring interest rates to remain at 13.75%, the highest they have been in the current cycle. Haddad reiterated criticism of the central bank, saying the bank could already begin cutting rates.

☆ Brazil working on payment solution for exports to Argentina, says minister
▼ + stars: | 2023-05-02 | by ( ) www.reuters.com time to read: +1 min

BRASILIA, May 2 (Reuters) - Brazilian Finance Minister Fernando Haddad said on Tuesday that the country is working on a solution to ensure that Brazilian exporters are paid for sales to Argentina, which is currently facing a severe economic crisis and a shortage of U.S. dollars. Argentina is Brazil's third largest trading partner after China and the United States. "We are trying to find a mediated solution," he said, adding that it "necessarily" involves the granting of collaterals by Argentina, which are being currently studied. Haddad will take part in a meeting between Brazilian President Luiz Inacio Lula da Silva and Argentine Alberto Fernandez later on Tuesday. Brazil also decided to recently simplify procedures of the local currency payment system (SML), an infrastructure that brings together the central banks of Brazil, Argentina, Paraguay and Uruguay.

☆ Brazil plans 'digital tax' on shipments from e-commerce giants
▼ + stars: | 2023-04-20 | by ( ) www.reuters.com time to read: +2 min

SAO PAULO, April 20 (Reuters) - Brazil's finance minister said on Thursday the country would implement a "digital tax" on shipments from e-commerce giants, after backtracking earlier this week from a decision to tax individual-to-individual shipments of up to $50. "We will follow the example of developed nations, a digital tax," Finance Minister Fernando Haddad told reporters. "Consumers will be exempt from any tax collection when they make the purchase, companies will collect it without passing on any additional cost." The source emphasized that the tax in question already exists and will be collected electronically prior to the shipment of goods. Alibaba Group's (9988.HK) AliExpress, Sea Ltd-owned (SE.N) Shopee and Shein were seen as the main targets of the measure.

☆ Brazil mulls 'digital tax' on shipments from e-commerce giants -minister
▼ + stars: | 2023-04-20 | by ( ) www.reuters.com time to read: +1 min

SAO PAULO, April 20 (Reuters) - Brazil's finance minister said on Thursday the country would implement a new "digital tax" on shipments from e-commerce giants, after backtracking earlier this week from a decision to tax individual-to-individual shipments of up to $50. "We will follow the example of developed nations, a digital tax," Fernando Haddad told reporters. He had already announced the government would look for administrative means and implement heightened oversight to close a tax loophole that Asian e-commerce giants were seen taking advantage of. Alibaba Group's (9988.HK) AliExpress, Sea Ltd-owned (SE.N) Shopee and Shein were seen as the main targets of the measure. Haddad previously said AliExpress and Shopee had agreed with the tax proposal before the government reversed it.

☆ Brazil's government takes measures to boost consumer and capital market credit
▼ + stars: | 2023-04-20 | by ( ) www.reuters.com time to read: +3 min

BRASILIA, April 20 (Reuters) - Brazil's government announced a package of 13 measures on Thursday to ease consumer access to credit and reduce associated costs in the capital and insurance markets, a move the new leftist administration hopes will boost investment and revitalize a slowing economy. Brazil's Secretary of Economic Reforms, Marcos Barbosa, said the measures aim to strengthen the credit market in the long term, paving the way for the country's capital market to become as robust or larger than the 5 trillion reais ($988 billion) banking market. The package includes a decree to allow the issuance of bonds with an income tax exemption for investments in sectors such as healthcare, education, and public security. The government also plans to introduce legislation to enhance safeguards for minority investors in the capital market against harm caused by unlawful actions of controlling shareholders and administrators. Finance Minister Fernando Haddad on Monday had indicated that the package would also feature a measure to lower revolving credit card rates.

"We have an extraordinary relationship with China, a relationship that every day gets more acute and stronger," Lula said before his meeting with Xi. Brazil and China need to work together so that the relationship is not merely one of commercial interest, he added. China and Brazil did agree to set up a working group to pursue cooperation on semiconductors, strengthening ties with Beijing in areas of sensitive technology. Brazil is now the largest recipient of Chinese investment in Latin America, driven by spending on high tension electricity transmission lines and oil production. On Friday, the two countries agreed to encourage their companies to invest in each country in infrastructure, energy transition, logistics, mining, agriculture and high-tech industries.

☆ Lula's government should revise Brazil's mandatory spending constraints, says Haddad
▼ + stars: | 2023-04-08 | by ( ) www.reuters.com time to read: +1 min

BRASILIA, April 8 (Reuters) - Brazil's government should revise the rules for increasing mandatory expenses and budget constraints before the end of the year, once reform of the tax system has been decided, Finance Minister Fernando Haddad said. "What we want to discuss, after the tax reform, is a rule that ends the chopping and changing, and gives greater stability to this type of spending," Haddad said in an interview published on Saturday by newspaper Folha de S.Paulo. Brazilian governments permanently face spending difficulties because 95% of the federal budget is tied to obligatory expenditure, leaving only 5% for discretionary spending. When they presented the new fiscal framework that proposes limiting real growth in public spending, Treasury officials said it would be necessary to revise the floor for spending on health and education, which is currently linked to the level of government revenues, to avoid reduction in other areas. Reporting by Bernardo Caram; Editing by Leslie AdlerOur Standards: The Thomson Reuters Trust Principles.

☆ Brazil targets Asian e-commerce giants, local companies in tax push
▼ + stars: | 2023-04-03 | by ( ) www.reuters.com time to read: +2 min

BRASILIA, April 3 (Reuters) - Brazil will soon unveil tax measures, including a crackdown targeting Asian e-commerce giants and curbs on some company tax benefits, as it looks to raise more than 100 billion reais ($20 billion), Finance Minister Fernando Haddad said on Monday. The e-commerce measures come in response to complaints from local retailers about unfair competition from Asian giants such as AliExpress, Shein, and Shopee. He later told journalists that combating the practice, which Haddad called "smuggling", should generate 7 billion reais to 8 billion reais in new revenue for the government. The most significant impact will come from the government's move to seek approval from the Federal Supreme Court to disallow companies from receiving tax breaks from states on operating expenses, which result in them paying less federal tax. The tax reform proposal should be voted in the Lower House by July and in the Senate by October, Haddad said.

BRASILIA, March 29 (Reuters) - The goal of Brazil's new fiscal framework will be a zero primary deficit in 2024, followed by surpluses in subsequent years, as President Luiz Inacio Lula da Silva seeks a sustainable trajectory for the country's public debt, government sources told Reuters on Wednesday. According to one of the sources, the primary surplus will be equivalent to 0.5% of GDP in 2024, rising to 1% of GDP in 2025. The new framework will combine a target for primary results with a spending rule and will have adjustment mechanisms in case of noncompliance. Sources spoke anonymously, as the topic is being addressed in private conversations with congressmen. Talking to reporters, Padilha said that the leaders of Brazil's Congress have indicated that, once submitted, the fiscal rules should be quickly approved.

☆ Brazil's monetary policy director leaves office amid government uncertainty over replacement
▼ + stars: | 2023-03-27 | by ( ) www.reuters.com time to read: +2 min

The central bank stated in a note that Serra's departure follows the end of his term on Feb. 28. The day after Serra's departure, the director of Economic Policy, Diogo Guillen, began temporarily accumulating his function, a common practice at the central bank until substitutions are made. Supervision director Paulo Souza, whose term also expired at the end of February, remains in his current position. Under a 2021 law granting formal autonomy to the central bank, Governor Roberto Campos Neto will remain in office until December 2024. Lula, who has criticized Campos Neto and the central bank for keeping interest rates high to combat inflation, will eventually replace all nine members of the bank's board, which decides monetary policy.

☆ Brazil's Lula to announce fiscal framework after China visit, criticizes central bank
▼ + stars: | 2023-03-21 | by ( ) www.reuters.com time to read: +2 min

The new framework is considered crucial to addressing fiscal concerns after Lula secured congressional approval for a multi-billion-real package that bypasses the constitutional spending cap to boost social spending and fulfill campaign promises. However, in an interview with local news website Brasil 247, Lula said it wouldn't make sense to announce the fiscal framework and then travel to China. Reacting to the postponement, interest rate futures closed higher at the short end of the yield curve. During the interview, Lula also criticized the country's central bank, saying that an interest rate of 13.75% - its current level - is "irresponsible," adding he will continue to fight the current level to stimulate the economy. Brazil's central bank has been holding its benchmark interest rate at a six-year high since September and, according to economists polled by Reuters, is expected to maintain it unchanged at the Wednesday meeting.

☆ Brazil's Finance Ministry has finalized proposal for new fiscal framework, says Haddad
▼ + stars: | 2023-03-06 | by ( Reuters Staff | ) www.reuters.com time to read: +2 min

FILE PHOTO: Brazil's Finance Minister Fernando Haddad speaks during a news conference in Brasilia, Brazil February 28, 2023. REUTERS/Adriano MachadoBRASILIA (Reuters) - Brazilian Finance Minister Fernando Haddad said on Monday that his ministry has finalized its contribution to the design of the country’s new fiscal framework, but highlighted that other ministries will still evaluate it before the president. “We have finalized the design of the fiscal framework internally and now I will discuss it with the economic team before presenting it to President Luiz Inacio Lula da Silva, because it cannot be a Finance Ministry proposal,” Haddad told journalists at the ministry. Haddad also stated that Lula has commissioned the development of a system behind the so-called Desenrola program, aimed at refinancing consumer debt with government guarantees. According to Haddad, the program’s guarantee fund will have about 10 billion reais ($1.9 billion), an amount that will be sufficient to renegotiate 50 billion reais in debt from 37 million individuals.

☆ Brazil's Haddad says high interest rate is country's main issue
▼ + stars: | 2023-03-01 | by ( ) www.reuters.com time to read: +1 min

BRASILIA, March 1 (Reuters) - Brazil's Finance Minister Fernando Haddad said on Wednesday that the country's high interest rate is the primary obstacle to economic growth, adding that recent government measures such as reinstating fuel taxes would pave the way to monetary easing. In an interview with news portal UOL, he said he believed this was the correct path to follow, rather than changing the central bank's inflation targets. Brazil's benchmark interest rate is currently at a six-year high of 13.75%, which Haddad said was causing a "credit problem" although he did not give further details. "We will recover the public budget from the perspective of revenue and expenditure to quickly create space for reducing interest rates," he said. "The inflation target will not be what causes the interest rate to fall."

☆ Brazil's central govt tops expectations with record January budget surplus
▼ + stars: | 2023-02-27 | by ( ) www.reuters.com time to read: +1 min

BRASILIA, Feb 27 (Reuters) - Brazil's central government posted a better-than-expected primary budget surplus in January on the back of record tax revenues, Treasury data showed on Monday, although the outlook for the year is for a large deficit. The central government, comprised of the Treasury, central bank and social security, reported a primary budget surplus of 78.3 billion reais ($15 billion) in January, above the median forecast of a 60.9 billion reais surplus in a Reuters poll. After pushing its benchmark rate from a record-low of 2% in March 2021, the central bank paused its tightening cycle in September, holding it at 13.75%. Although the central government's primary surplus reached 54.5 billion reais in 12 months, the primary deficit in this year's budget, the first under President Luiz Inacio Lula da Silva, had been forecast at 231.6 billion reais after Congress approval for a multi-billion spending package to increase expenses and meet campaign promises. ($1 = 5.2054 reais)Reporting by Marcela Ayres; Editing by Mark Porter and Aurora EllisOur Standards: The Thomson Reuters Trust Principles.

☆ Brazil govt to resume fuel taxes -ministry
▼ + stars: | 2023-02-27 | by ( ) www.reuters.com time to read: +1 min

BRASILIA, Feb 27 (Reuters) - The Brazilian government is set to resume the collection of federal taxes on fuels this week, the Finance Ministry said on Monday. According to the ministry, the tax revenues from fuels will be 100% recovered with the end of the waiver. The measure to exempt federal taxes levied on fuel was launched by former President Jair Bolsonaro last year as he sought to boost his popularity by lowering prices ahead of a re-election bid. With the return of the taxes on gasoline and ethanol, Haddad's team will have a reinforcement of approximately 29 billion reais ($5.59 billion) in federal revenues this year. The end of the waiver is seen positively by the ethanol industry, since without taxes the biofuel loses competitiveness against gasoline.

☆ Debate grows among Lula's team over Brazil fuel tax policy
▼ + stars: | 2023-02-24 | by ( ) www.reuters.com time to read: +3 min

Former far-right Jair Bolsonaro unveiled the fuel tax cut last year as he sought to ease inflation and win over voters ahead of the election which he eventually lost to Lula. Since Lula's victory, debate has raged within his Workers Party (PT) over what to do with the costly and popular measure. Tensions are now mounting over whether to extend further the gasoline and ethanol tax waiver. In a series of Twitter posts, Congresswoman Gleisi Hoffmann, president of Lula's Workers Party (PT), said fuel taxes should only resume once state-run oil giant Petrobras (PETR4.SA) defines a new pricing policy. Vice-President Geraldo Alckmin said on Friday the government had not yet made a decision on fuel taxes.

☆ Brazil's central govt posts 54.1 bln reais surplus in 2022, first in 9 years
▼ + stars: | 2023-01-27 | by ( ) www.reuters.com time to read: +2 min

The central government, comprising Brazil's Treasury, central bank and Social Security, posted a 54.1 billion reais ($10.7 billion) budget surplus before interest payment in 2022. It followed a 4.4 billion reais surplus in December, which came higher than the 2.8 billion reais expected in a Reuters poll. Private economists polled weekly by the central bank expect 2022 GDP to rise 3%, from just 0.3% they had forecast when last year began. Surging expenses led the primary deficit budgeted for 2023 to reach impressive 232 billion reais. ($1 = 5.0783 reais)Reporting by Marcela Ayres; Editing by Mark Porter and Steven GrattanOur Standards: The Thomson Reuters Trust Principles.

☆ Argentina and Brazil are discussing plans for a common currency — analysts can scarcely believe it
▼ + stars: | 2023-01-24 | by ( Sam Meredith | ) www.cnbc.com time to read: +2 min

Argentina President Alberto Fernandez (R) and Brazil President Luiz Inacio Lula da Silva (L) greet each other after signing a series of agreements during a news conference in Buenos Aires. Argentina and Brazil, the two largest economies in South America, are in early talks to create a common currency, as part of a coordinated bid to reduce reliance on the U.S. dollar. Speaking on his first international visit since taking office, Lula said that the currency would initially be designed for trade and transactions between Brazil and Argentina. Brazil's Finance Minister Fernando Haddad said that the adoption of a common currency was not designed to replace the Brazilian real and the Argentine peso. "Developing and implementing a common South American currency is, therefore, pie in the sky."

☆ Brazil, Argentina to encourage trade, says Haddad; plays down common currency
▼ + stars: | 2023-01-23 | by ( Lisandra Paraguassu | ) www.reuters.com time to read: +2 min

His remarks came after Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez published a joint article saying their aim for greater economic integration included studies of a common South American currency. Haddad, who floated such a possibility in an article last year, said removing trade barriers between the two largest economies in South America could involve using a single currency for commerce, given a lack of U.S. dollars in Argentina. "Trade is really bad and the problem is precisely the foreign currency, right? Haddad noted Argentina was an important buyer of Brazilian industrial goods and that "several possibilities" were being floated to circumvent its currency problems, though no decision had been made. The Financial Times had previously reported, citing Argentina's Economy Minister Sergio Massa, that the neighboring nations would announce this week they were starting preparatory work on a common currency.

London CNN —The two biggest economies in South America are starting talks to create a common currency. At a press conference in Buenos Aires, he said establishing a common currency for trade would reduce reliance on the US dollar, whose sharp ascent last year was painful for countries around the world. Talk of creating a common currency has periodically cropped up since its founding in 1991. Still, investors are doubtful efforts to create a common currency in the region will gain much traction. “Brazil and Argentina are a long way away from the convergence in economic policy and performance required to launch [a] monetary union,” he said.

☆ Davos 2023: Brazil lacking world aid to fight climate change, Silva says
▼ + stars: | 2023-01-17 | by ( ) www.reuters.com time to read: +2 min

She said Brazil has regained the trust of the European Parliament with regards to resistance to the EU trade deal with South America's Mercosur bloc. Speaking at the World Economic Forum (WEF), Silva said Brazil's new government that took office on Jan. 1, was rebuilding Brazil's environmental agencies and policies that were "completely dismantled" by the previous administration. Silva said President Luiz Inacio Lula da Silva had offered to hold the COP30 climate summit in the Amazon region in 2025 to show its commitment towards curbing in climate change. Silva and Finance Minister Fernando Haddad represented Brazil at the WEF and discussed the country's economic, social and environmental roadmap in a panel. Reporting by Alessandra Galloni in Davos, Anthony Boadle and Eduardo Simoes in Brazil; Editing by Andrew Heavens and Bernadette BaumOur Standards: The Thomson Reuters Trust Principles.

Speaking to reporters, Rui Costa, also a minister in Lula's cabinet, said government meetings were scheduled for Tuesday and the Finance Ministry and Management Ministry will announce measures this week. Hundreds of supporters of former President Jair Bolsonaro stormed and vandalized the Congress, the Supreme Court, and the presidential palace on Sunday. The attacks on state institutions are considered the worst since the country's return to democracy in the 1980s. The minister participated in emergency meetings with Lula and others on Monday. Reporting by Bernardo Caram; Editing by Steven Grattan, Andrea Ricci and Kenneth MaxwellOur Standards: The Thomson Reuters Trust Principles.

☆ Criticism of Lula's economic plans mounts as Brazil markets tank
▼ + stars: | 2023-01-04 | by ( Gabriel Araujo | ) www.reuters.com time to read: +3 min

Haddad, a former mayor of Sao Paulo, took office vowing to restore public accounts and with the challenge of presenting a credible fiscal framework after Congress passed a giant Lula social spending package. Markets reacted badly to Haddad's first days in office, especially after Lula ordered a budget-busting extension to a fuel tax exemption which Haddad had publicly opposed. "Haddad learned on his first day in office that he will be a decorative figure, a sort of task worker for President Lula," the conservative daily said in an editorial. On Tuesday, markets were further rattled by remarks by Lula's social security and labour ministers. That was compounded when he said Lula's government would need to review the investor-friendly pension reform approved by Bolsonaro's administration.

☆ Brazil's VP says development bank should be strengthened to leverage the economy
▼ + stars: | 2023-01-04 | by ( ) www.reuters.com time to read: +3 min

Asked whether this would involve changing the so-called TLP rate, charged by BNDES to lenders, he said only "it is important to create conditions to reduce the interest rate." It replaced the former TJLP rate, which was set by the government below the country's Selic base rate, to subsidize corporate loans. In his inaugural speech, Alckmin said his ministry will have BNDES under its wing, stressing it was essential to strengthen the bank's role to leverage the economy. According to Alckmin, BNDES should act "as a dynamizer of the industry competitiveness and exports, especially those of higher added value." That contrasts with former President Jair Bolsonaro, who centralized policy formulation and decision-making into a single Economy Ministry.

The sugar and ethanol (S&E) industry, as well as international sugar traders, were widely expecting the resumption of federal taxes on gasoline and ethanol, as indicated by Finance Minister Fernando Haddad last week. "In our perspective, this measure might have negative effects on the S&E sector, as it maintains the ethanol prices below the market's forecast, while the expectation was for an increase in ethanol prices in the beginning of 2023," said Citi Research. Sugar and ethanol industry group Unica said the new administration had become "an accomplice" to the attack on the environment begun under the former administration, adding that the measure contradicts Lula's speech at the COP 27 U.N. climate meeting in November. The group said that the tax exemption was unconstitutional, since the law requires the federal government to give a tax incentive to biofuels. Mauricio Muruci, an analyst with Safras & Mercado, said fuel distributors were actively buying ethanol late last year before the expected tax return.

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