All eyes on Brazil’s Economy Minister

Author

Gustavo Ribeiro
March 26, 2019 • Reading Time: 6 minutes

Good morning! All eyes on Brazil’s Economy Minister. Michel Temer released from prison. As truckers threaten a new strike, diesel prices go up.

All eyes on Brazil’s Economy Minister

After President Jair Bolsonaro and House Speaker Rodrigo Maia spent a week publicly trading criticism, the government is relying on Economy Minister Paulo Guedes to lower the temperature and establish a dialogue between the government and Congress. Today, Mr. Guedes will speak before the House’s Committee of Constitution and Justice (CCJ)—where his pension reform bill is currently stalled.

Mr. Guedes has shown a lot of optimism about the reform, saying he expects the bill to pass within 3 or 4 months, “overcoming whatever communication problem there may be.” How Mr. Guedes performs today is being considered crucial for the future of the proposal. Yesterday, the government’s pension reform bill received the formal support of 11 employers’ unions. In Congress, six parties declared they will back the reform, with caveats: they won’t support changes to rural pensions, nor cuts to pensions for the poor.

Speaker Rodrigo Maia committed himself not to sabotage the administration with bills that would blow up the budget (which Congress did to Dilma Rousseff in 2015), nor will he accept impeachment requests against President Bolsonaro. Other than that, he said, the government is on its own to rally the troops around the pension reform.

Michel Temer released from prison

After four days in jail, former President Michel Temer was released by a federal judge, who considered the request for his arrest didn’t meet the minimum requirements established by Brazilian law. The ruling also benefited the other individuals arrested during the same police operation.

Federal Judge Ivan Athié stated in his decision that there is no evidence that Mr. Temer and the other defendants represent a risk to the public order, nor that they are able to tamper with the investigation—the most recent wrongdoings narrated by the arrest order date back from 2017. Judge Athié, however, made sure to say he is “not against Operation Car Wash.”

Car Wash prosecutors in Rio de Janeiro have promised to appeal the decision. The prosecution says that Mr. Temer is a criminal ringleader, leading a decades-long corruption scheme that embezzled almost BRL 2bn of public money. Despite repealing Mr. Temer’s arrest, Judge Athié upheld the freezing of BRL 62m of the former president’s assets.

As truckers threaten a new strike, diesel prices go up

Last year, truckers from across the country went on an 11-day strike to protest rising diesel prices which slashed their profit margins. The country nearly ground to a halt—with food and fuel shortages causing losses of BRL 16bn. Now, truckers are threatening to go on strike once again. A stoppage has been scheduled on social media for March 30. Union leaders dismiss the threat, saying they won’t join the protest. However, last year, the strike happened independently of unions.

Diesel prices have reached their peak this year. In refineries, a liter of diesel has gotten 7% more expensive since January. At the pumps, however, the hike is of 3%—showing that the rise in prices by Petrobras (which holds the monopoly in fuel distribution) has been absorbed by the distribution chain. This means that prices for the final consumer could go further up.

In 2018, President Jair Bolsonaro became a firm supporter of the strike. Last week, though, he said on social media that “fuel prices are among Brazilians’ top concerns,” and that he has tried to find a solution for the issue. Truckers want Petrobras to hold monthly updates of prices according to international markets—as opposed to changing them daily. They also complain that the minimum freight price tables created by Michel Temer’s administration haven’t been respected.

What else you need to know today

  • Dictatorship. The government has confirmed that President Bolsonaro ordered the Ministry of Defense to make the “due celebrations” of the 55th anniversary of the 1964 military coup. Mr. Bolsonaro doesn’t consider 1964 a coup, rather a “necessary action to free Brazil from communism.” The government’s military wing, however, fear the move may create unnecessary political tension. 

  • Vale.Mining giant Vale had BRL 2.9bn seized by a court in Minas Gerais to ensure that the company will compensate residents of the town of Barão de Cocais, who had to be removed from their homes due to the risk of collapse of Vale’s nearby dam. A judge ordered the company to present its safety inspection reports—which might not say much, as the Brumadinho dam that collapsed in January had all safety permits in order, despite its structural problems.

  • GDP growth.Once again, the government is lowering its projection for Brazil’s GDP growth this year. Overall, cuts have pushed the forecast from 2.53% to only 2% since the beginning of the year. Question marks around the pension reform are the biggest concern. Markets, however, have increased their optimism about 2020—moving from 2.5% growth to 2.78%. That is, of course, considering that the reform will pass without being overly diluted by Congress.

Reply

or to participate.