Brasília studies bailing out Petrobras

Petrobras' headquarters in Rio de Janeiro

With $24 billion in debt coming due in the next two years, Petrobras may end up getting help from Brasília. According to government sources, there are proposals to bolster the state-controlled oil company’s equity with a loan contract without maturity, a hybrid instrument of debt and equity (IHCD) extended by the National Treasury.

Brazil Finance Ministry reviewing R$20bn in loans for states, cities

The Finance Ministry is reviewing R$20 billion in loan requests from states and cities. Domestic financing represents R$4.5 billion of the total, while US$3.9 billion are foreign loans. States need federal clearance to borrow R$16.4 billion of the total, according to a Valor survey of National Treasury data. Governors have been criticizing the Finance Ministry for holding back the loans, which they consider crucial for financing several projects. The ministry says it is developing new policies to evaluate the loans. “The approval of huge credit transactions for sub-national entities in the last few years has proven unsustainable in the new economic scenario,” the ministry says.

valor.com.br 11/19/15
Waldemar Jezler

Euphoria with Meirelles may prove unjustified

The financial market has supported the potential arrival of former central banker Henrique Meirelles at the Ministry of Finance by unmistakably pushing up the Ibovespa stock index and the real, the Brazilian currency. But what may be happening there is a classic case of overpricing.

Mr. Meirelles doesn’t represent a different economic policy from Joaquim Levy, the current minister. Therefore, one can deduct that the current path will be very similar to what the former Central Bank (BC) chief would take and that this is not the main explanation for the adjustment in asset prices. The euphoria with the change in command seems result of the view that Mr. Meirelles would have autonomy to appoint a new BC chief and a new minister of Planning. He would form a more cohesive economic team, capable of imposing on President Dilma Rousseff a consistency in the economic policy that doesn’t exist today.

Dilma under growing pressure to replace Finance Minister

Joaquim Levy and Henrique Meirelles

The process of replacing Finance Minister Joaquim Levy gains ground within the government, with the consequent change in the economic policy’s guidelines. The succession is likely to take place in the beginning of January, according to sources of the political coordination and of the leadership of the Workers’ Party (PT), but the exchange could happen as early as December, if the political and economic crises worsen.

Michel Temer: “A Bridge to the Future”

The most relevant aspect of the document “A Bridge to the Future,” launched last week by the Brazilian Democratic Movement Party (PMDB), is that it lucidly addresses themes forbidden in the Brazilian economic debate. The prohibition was promoted by the discourse and the practice of the Workers’ Party (PT) administrations since the ascent of Luiz Inácio Lula da Silva to power, in 2003. It is clearly a sign by Vice President Michel Temer, who presents himself as alternative in view of a possible impeachment of the president.