Archive for the ‘Brazil’ Category

Brazil attorney general seeks investigation into political figures in big kickback scandal

| March 4th, 2015 | No Comments »
US News & World Report


RIO DE JANEIRO (AP) — Brazil’s attorney general on Tuesday asked the Supreme Court for permission to investigate 54 people, the majority top political figures, for alleged involvement in what prosecutors say is the country’s largest corruption scandal yet uncovered.

Attorney General Rodrigo Janot’s request opens an expansive new phase of the investigation into the kickback scheme at state-run oil company Petrobras.

“We’re going to work with tranquility, with balance. Those who must pay will pay,” Janot told supporters outside his office late Monday night. “We’re going to investigate. This will be a long process, we’re just now beginning. The investigation begins and we’ll follow it through to the end.”

Janot didn’t release the names of the people he wants to investigate — that can only happen once the top court says he can begin his work.

Under Brazilian law, a Supreme ... Read More

Brazil’s economy implodes; Rousseff pops to the supermarket

| March 3rd, 2015 | No Comments »
Financial Times

Another week goes by and the outlook for Brazil’s economy gets gloomier still. The consensus on GDP is now for a 0.58 per cent contraction this year, according to the central bank’s latest weekly survey of market economists, while industrial production is expected to contract by 0.72 per cent. Inflation is expected to rise to 7.47 per cent; the central bank’s policy interest rate is seen ending the year at 13 per cent.

The survey was published on Monday after a weekend that saw yet another apparent rift open up at the top of government, along with some surprising behaviour by President Dilma Rousseff.

The gloomy central bank survey should come as no surprise. Marcelo Carvalho and colleagues at BNP Paribas, for example, have long been predicting a 1 per cent contraction in GDP this year. They expect inflation to come in at 8 per cent – ... Read More

Brazil is in its worst mess since the early 1990s

| February 27th, 2015 | No Comments »
The Economist

Campaigning for a second term as Brazil’s president in an election last October, Dilma Rousseff painted a rosy picture of the world’s seventh-biggest economy. Full employment, rising wages and social benefits were threatened only by the nefarious neoliberal plans of her opponents, she claimed. Just two months into her new term, Brazilians are realising that they were sold a false prospectus.

Brazil’s economy is in a mess, with far bigger problems than the government will admit or investors seem to register. The torpid stagnation into which it fell in 2013 is becoming a full-blown—and probably prolonged—recession, as high inflation squeezes wages and consumers’ debt payments rise (see article). Investment, already down by 8% from a year ago, could fall much further. A vast corruption scandal at Petrobras, the state-controlled oil giant, has ensnared several of the country’s biggest construction firms and paralysed capital spending in swathes of ... Read More

Brazil’s coming recession

| February 27th, 2015 | No Comments »
The Economist

It is easy for a visitor to Rio to feel that nothing is amiss in Brazil. The middle classes certainly know how to live: with Copacabana and Ipanema just minutes from the main business districts a game of volleyball or a surf starts the day. Hedge-fund offices look out over botanical gardens and up to verdant mountains. But stray from comfortable districts and the sheen fades quickly. Favelas plagued by poverty and violence cling to the foothills. So it is with Brazil’s economy: the harder you stare, the worse it looks.

Brazil has seen sharp ups and downs in the past 25 years. In the early 1990s inflation rose above 2,000%; it was only banished when a new currency was introduced in 1994. By the turn of the century Brazil’s deficits had mired it in debt, forcing an IMF rescue in 2002. But then the woes vanished. Brazil became ... Read More

For Emerging Market Investors, Brazil Has Become A Hot Mess

| February 26th, 2015 | No Comments »


For those who like their macro trades to be alluring and exotic, but with an overdose of danger, then Brazil is the place for you. Like Rio de Janeiro itself, pretty but deadly, Brazil has become the hot mess of emerging markets.

Not even Russia, the wild east sanctioned geopolitical disaster zone that it is today, can compare to Brazil. Russia is, well, Russia. It’s always trading at a discount to better managed, diverse and transparent economies like Brazil.  But Russia is failing because of geopolitics and oil. Brazil, meanwhile, is shooting itself in the foot.

The most visible problem in Brazil today is the ongoing scandal involving Petrobras. Brazil’s state run oil firm was downgraded by Moody’s to junk bond status on Tuesday. More importantly, the corruption scandal has changed investor perception of Petrobras. It’s no longer trustworthy. Investor sentiment has soured to the ... Read More

Migrants’ remittances to Latin America grew 4 pct. in 2014

| February 24th, 2015 | No Comments »
From Fox News Latino

Expatriates’ remittances to Latin America and the Caribbean increased 4 percent in 2014 to $62.3 billion, the biggest jump since the global economic crisis in 2009, the Inter-American Dialogue, a Washington think-tank, said Tuesday.

The largest gains went to Mexico and Central America, while several South American countries saw a decrease in remittances, due largely to the persistent economic crisis in Spain.

The overall advance in remittances to Latin America reflects improvements in the U.S. labor market, new migration patterns and the proliferation of new ways to transfer money, according to the report.

Remittances to Mexico increased 8.8 percent over 2013, while funds sent to Honduras increased 12.5 percent, and to Guatemala, 9 percent.

The Spanish economic crisis, with high levels of unemployment and falling pay, is largely responsible for decreases in remittances to Bolivia, 2.4 percent; Peru, 2.3 percent, and Colombia, which saw ... Read More

Brazil Experts Fear a Two-Year Downturn

| February 24th, 2015 | No Comments »
Wall Street Journal WSJ-01


For all the debt crises, hyperinflation and boom-and-bust cycles Brazil’s economy has suffered in recent decades, the country hasn’t posted two consecutive years of contraction since the Great Depression.

But if 2014’s fourth quarter was as bad as many economists think and their expectations for this year hold true, Brazil will repeat that feat for the first time since 1930-31.

On Monday, economists polled weekly by Brazil’s central bank downgraded their consensus 2015 forecast to a 0.5% fall in gross domestic product.

And the central bank’s preliminary indicator this month revealed a 0.12% drop in economic activity in 2014, though the Brazilian Institute of Geography and Statistics won’t release official GDP figures for the year until next month.

Finance Minister Joaquim Levy recognized the possibility of a 2014 decline at an event in the New York last week. “We’ve been in a slow patch more recently and we all [feel] that growth ... Read More

5 Reasons Brazil Is Getting Close to the Brink

| February 23rd, 2015 | No Comments »
From Time

Brazil is grappling with a lingering corruption scandal, colossal drought, and an unpopular president who is suffering the consequences. Here are five reasons the country’s prospects look increasingly grim:

Bleak economic outlook The world’s seventh largest economy is off to a rough start in 2015. Within the first 10 days of February, Brazil’s Real lost a tenth of its value against the dollar. January saw the country’s inflation rate increase to 1.24% from 0.78% the previous month, the highest rate since February 2003. Brazil’s economy is hardly expected to grow this year: the IMF forecasts just a 0.3% increase in GDP for this major emerging market.

Water shortages Brazil is suffering through a historic drought, making it likely that the government implements water and power rationing. In 2014, Sao Paulo suffered the worst drought in over 80 years; with peak rainy season now over, its main reservoir sits at 6% of capacity. Since hydropower accounts for some 70% of Brazil’s ... Read More

Brazil’s scandalous boom to bust story

| February 20th, 2015 | No Comments »
From CNN

Brazil looked like the next great economic growth story a few years ago, right after China. So how did things there get so bad, so fast?

Five years ago its economy grew three times faster than the United States. In 2011 its economic size surpassed Great Britain’s. Millions of Brazilians moved from poverty to the middle class, and the president at the time, Luiz Inácio Lula da Silva, had an 83% approval rating.

Eike Batista, once Brazil’s richest person, told “60 Minutes” that his nation was realizing its potential.

“Brazil has put its act together,” Batista told 60 minutes in 2010. “We’re walking into a phase of almost full employment…It’s unbelievable.”

It certainly was unbelievable.

Brazil’s economy has had a dramatic fall from grace. The nation has been embroiled in a massive political scandal, it’s seen a historic bankruptcy and is being led by an unpopular president, Dilma Rousseff, who is trying to preserve Brazil’s economy.

“Brazil was ... Read More

Brazil’s Justice Minister Under Fire for Meeting Amid Corruption Scandal

| February 20th, 2015 | No Comments »
Wall Street Journal WSJ-01


SÃO PAULO—Brazil’s justice minister is under fire for granting a private meeting to lawyers of a construction firm implicated in a corruption scandal at Petróleo BrasileiroS.A. , an unusual move that has drawn public condemnation and raised concerns about the influence of powerful companies in Brazil.

Justice Minister José Eduardo Cardozo this week acknowledged meeting in Brasília on Feb. 5 with lawyers from building giant Odebrecht SA., whom federal prosecutors have accused of being part of a cartel that skimmed hundreds of millions of dollars from state-owned Petrobras through inflated contracts.

Odebrecht, Brazil’s largest construction company, has denied wrongdoing and said it is cooperating with the probe. No company officials have been charged.

Odebrecht attorney Dora Cavalcanti Cordani said Thursday she was part of a legal team that went to the Justice Ministry to complain about suspected leaks of confidential information related to the federal investigation, nicknamed Operation Car Wash.

Ms. Cordani, who ... Read More

Brazil Aims to Boost Economic Ties with U.S.

| February 19th, 2015 | No Comments »
Real Clear World-01

By Tim Ridout

WASHINGTON – Fresh off a narrow victory in a contentious election, Brazilian President Dilma Rousseff has signaled an interest in restoring momentum in Brazil’s ties with the United States as well as a renewed focus on the European Union. Brazil’s growth is collapsing due to continuing infrastructure, regulatory, and fiscal problems, as well as tightening external credit and low global commodity prices. The cumulative impact of these factors is encouraging tighter fiscal and monetary policies at home, and a trade agenda that focuses on a Mercosur-EU free trade agreement with Brussels and trade facilitation and regulatory convergence with Washington.

These initiatives are being pursued in the context of negotiations over a Transatlantic Trade and Investment Partnership between the United States and EU, a mega-trade deal that Brazil worries will leave it outside global value chains. Given its similar fears regarding the Trans-Pacific Partnership, stagnant domestic economic ... Read More

Petrobras kickback scandal roils Brazilian waters

| February 18th, 2015 | No Comments »

The ongoing scandal in Brazil over corruption in the state-owned oil company Petrobras continues to create headlines. This week Pedro Barusco, a former executive in Petrobras, claims to have received $200,000 to secure a $100 million contract for Rolls Royce. The British multinational joins dozens of other companies involved in what has become one of Brazil’s most notorious corruption scandals. As investigators scrutinize the involvement of the leaders of the ruling Workers’ Party (PT), it is apparent that President Dilma Rousseff has yet to see the worst of the political fallout from this scandal.

Several Petrobras officials have been accused by investigators of scheming to inflate prices on construction contracts in order to pocket the excess funds or provide kickbacks to PT politicians. Rousseff has denied knowledge of the corruption, despite having chaired the Petrobras board from 2003-2010.

Two weeks ago Petrobras’ CEO Maria das Graças Foster was forced to resign along with ... Read More

Latin America 2015 outlook darkens as commodities sink: poll

| February 13th, 2015 | No Comments »
Article originally appeared in Reuters


(Reuters) – Latin America has embarked on a painfully long period of greater austerity, and lower commodity prices and economic growth will barely pick up speed this year, a Reuters poll found Thursday.

With nose-diving oil and metal prices weighing on government finances and jeopardizing investments, economists in the quarterly poll chopped 2015 growth forecasts again for the region’s seven largest countries, from Mexico to Argentina.

Brazil is now expected to grow a meager 0.5 percent in 2015, down from an estimate of 1.1 percent in the prior survey and barely up from an expected 0.2 percent growth in 2014.

Mexico will probably expand by 3.4 percent, compared to 3.7 percent in the last poll, while oil producer Venezuela, flirting with a debt default, will probably contract 2.0 percent, according to the poll of about 50 economists.

Growth would probably improve somewhat in 2016, but would still fall short of the ... Read More

Corruption Scandal at Petrobras Threatens Brazil’s Economy

| February 12th, 2015 | No Comments »
The New York Times


SÃO PAULO, Brazil – The accusations of corruption at Brazil’s state-controlled petroleum giant Petrobras have already led to a political scandal and a change in management. Now, the problems are threatening other Brazilian companies and may even tip the country into recession.

It would be hard to overstate Petrobras’s importance in Brazil. It produces more than 90 percent of the country’s petroleum, owns all of the nation’s refineries, operates more than 21,000 miles of pipelines, dominates wholesale gas and diesel distribution, and even owns the largest chain of service stations.

“The government’s plan was to make Petrobras as big as possible,” said Samuel Pessoa, an economist at the Fundação Getulio Vargas in Rio de Janeiro. He estimated that the company, through its own operations and its subcontractors, was responsible for about a tenth of Brazil’s economic output.

In the wake of a police investigation, called Operation Car Wash, that indicated that ... Read More

Brazil’s Rousseff under pressure but impeachment seen unlikely

| February 12th, 2015 | No Comments »
Article originally appeared in Reuters


(Reuters) – For the first time since a corruption scandal erupted at Brazil‘s state-run oil company Petrobras last year, senior opposition politicians are publicly floating the possibility of impeaching President Dilma Rousseff.

She does not face an immediate risk of impeachment, leading opponents told Reuters, but that could change if prosecutors find evidence that Rousseff knew of or benefited from the massive graft scheme.

Prosecutors say executives at Petroleo Brasileiro SA (PETR4.SA), as Petrobras is formally known, conspired with contractors to skim billions of dollars for themselves and political parties when Rousseff was the company’s chairwoman from 2003 to 2010.

The scheme continued after she became Brazil’s president in 2011.

Rousseff has conceded that graft took place but emphatically denied that she knew about it at the time. She has urged a full investigation and prosecutors have not presented any evidence that she was complicit in ... Read More

Petrobras is being crippled by government interference

| February 11th, 2015 | No Comments »
World Policy Blog

On February 4th, Maria das Graças Foster, chief executive at Petrobras, Brazil’s state-controlled oil giant, and five other senior executives resigned amid a corruption scandal.

In March last year, Paulo Roberto Costa, a former executive at Petrobras who run the oil producer’s refining division from 2004 to 2012, was arrested on money-laundering charges. In plea bargain testimony he accused politicians of being involved in an alleged corruption scheme.

Mr Costa confessed that the values of Petrobras contracts awarded to construction companies over the past decade had been inflated by up to 3 per cent to pay bribes and divert money into slush funds for politicians, mostly from President Dilma Rousseff’s ruling Workers’ Party, the PT, and its governing coalition allies. Petrol stations had been allegedly involved in money laundering.

More than 20 billion dollars might have been siphoned off from the government-controlled energy company and allegedly passed on to ... Read More

Brazil’s economy to stall this year, analysts say

| February 11th, 2015 | No Comments »
From Fox News Latino

Private sector analysts expect Brazil’s economy to stall this year, with inflation coming in nearly 1 percent above the high end of the government’s range, the Central Bank said Monday.

Analysts revised their 2015 gross domestic product (GDP) estimates downward from 0.03 percent to zero in the latest survey released by the Central Bank.

The GDP estimate was included in the Boletin Focus, a weekly Central Bank survey of analysts from about 100 private financial institutions on the state of the national economy.

The downward revision confirmed the pessimism among analysts, who back in early January expected Brazil’s economy to grow 0.50 percent this year.

Analysts have revised their GDP estimates downward for six straight weeks.

If the estimates prove accurate, Latin America’s largest economy will finish 2015 with its worst performance since 2009, when the GDP contracted 0.33 percent.

The government ... Read More

Brazil’s Rousseff Pours Gas on Petrobras Fire

| February 11th, 2015 | No Comments »

By making administration loyalist Aldemir Bendine the new head of Brazil’s state-run oil giant Petrobras, President Dilma Rousseff has demonstrated that she’s more interested in protecting her party’s interests than restoring the crown jewel of Brazil’s economy.

At the news, investors have dumped Petrobras shares, and you can’t blame them: The company is engulfed in a monumental corruption scandal involving billions in inflated construction contracts, which has implicated scores of executives and politicians. And Bendine, who has been running Banco de Brasil, is closely tied to Rousseff’s Workers’ Party, which has turned Petrobras into a piggy bank for pet programs. Bendine’s reputation is further clouded by an investigation into irregular loans and a large unexplained fine he paid to Brazil’s tax agency in 2012.

Of course, even if Rousseff had named more market-friendly executives to Petrobras’s top management team (after the company’s previous leaders defenestrated last week), they would still be reporting to her, which is ... Read More

Pitfalls at Petrobras

| February 6th, 2015 | No Comments »
The Economist

PETROBRAS used to impress the oil world with its expertise at tapping the black stuff thousands of metres beneath the ocean floor. Now Brazil’s oil behemoth is better known for plumbing a different kind of depth. It is mired in a multi-billion-dollar bribery scandal, indebted to the hilt and worth a third of the 405 billion reais ($250 billion) it was valued at shortly after its initial public offering in 2010. On February 4th its beleaguered boss, Maria das Graças Foster, succumbed to pressure and resigned, along with five senior executives.

Investors rejoiced: Petrobras’s shares, which had sunk by 17% the previous week, rebounded. Yet most of its woes are not Ms Foster’s fault. The government, which has a controlling stake, makes most of the big decisions. These have included making Petrobras hire and buy parts from inefficient local firms; telling it to build refineries in unappealing ... Read More

Petrobras, $262 Billion Poorer, Exposes Busted Brazil Dream

| February 6th, 2015 | No Comments »

By Julia Leite, David Biller and Tariq Panja

(Bloomberg) — When Brazil emerged from the global financial crisis as one of the world’s great rising powers, Petrobras was the symbol of that growing economic might.

The state-run oil giant was embarking on a $220 billion investment plan to develop the largest offshore crude discovery in the Western hemisphere since 1976 and was, in the words of then-President Luiz Inacio Lula da Silva, the face of “the new Brazil.”

Today the company epitomizes everything that is wrong with a Brazilian economy that has been sputtering for the better part of four years: It’s mired in a corruption scandal that cost the CEO her job this week; it has failed to meet growth targets year after year; and it’s saddling investors with spectacular losses. Once worth $310 billion at its peak in 2008, a valuation that made it the world’s fifth-largest company, Petroleo ... Read More

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