The Week Ahead in Brazil #84

What is happening in Brazil?

1. Politics – The Commission of Constitution and Justice (CCJ) of the lower house approved the extension of the payroll tax relief for 17 highest-employer sectors, totalling more than 6 million workers. The project will be valid until December 31, 2023.

President Jair Bolsonaro (no party) affirmed, on Tuesday (16), he is willing to give a pay raise to all federal public servants upon the approval of PEC dos PrecatĂłrios.

The Senate will have a public debate over the PEC dos PrecatĂłrios (PEC 23/2021), on Monday (22), at 3pm.

On Tuesday (23), the Senate’s Economic Affairs Committee will have the Ministers of Energy and Economy, and Petrobras’s president, discussing the fuel rising prices. On the same day, the Infrastructure Committee will have a public hearing with the Minister of Communications, Fábio Faria, to discuss the 5G implementation in Brazil.

2. Economy – The Ministry of Economy revised the GDP and inflation forecast to 2021 and 2022. According to the ministry’s Macrofiscal Bulletin, the 2021 inflation forecast increased from 7.90% to 9.70%; and for next year, from 3.75% to 4.70%. The new inflationary estimates converge with the Focus report of the Central Bank, which projects inflation to 9.77%. For 2021 GDP, the SPE reduced growth from 5.30% to 5.10, and growth for 2022 was revised from 2.50% to 2.10%. The market, according to Focus, estimates the 2021 GDP at 4.88% and 0.93% for 2022. See the complete report:

3. Public administration

According to the National Institute for Space Research (Inpe), deforestation in the Amazon reached 13,235 km², between August 2020 and July 2021. It is the highest rate of deforestation in the last 15 years in the so-called Legal Amazon.

This week, Brazil reached the mark of 60% of the population vaccinated against Covid-19, with the full cycle.


How to read it

1. The trend in politics remains positive, without relevant changes. Bolsonaro remains without provoking institutional conflicts. On Twitter, Bolsonaro has published government achievements, also the focus of his weekly broadcast on social media, despite adopting a more polarizing tone, especially against the PT and former President Lula.

The political scene in the Senate has not been favourable to the government on important issues, halting several topics, such as, for example, the privatisation of the Post Office, the hearing of André Mendonça for a Justice position the Federal Supreme Court (STF) and reform of the income tax (IRPF). The statement about the increase in the salaries for public servants did not go down well among the senators and did not help to improve the situation in the Senate. The issue of the increase should be addressed in the public hearing on the PEC of Precatórios in the Senate and will give a hard time for the government leader in the Senate and rapporteur of the PEC, Senator Fernando Bezerra Coelho (MDB-PE)

2. The trend for the economy remains neutral. The review of economic data by the Secretariat of Economic Policy shows that reality is harsh, especially concerning inflation. Nevertheless, the SPE has been spot on about the economy’s performance, especially regarding the GDP.

The peak of inflation should have been in October, instead of November, but we will wait a little longer to see November’s closing. This week, November’s IPCA-15 and job creation data (Caged) will be released.

3. Public management also remains neutral. The implementation of the Enem seems to have been unaffected by the collective dismissal of servers in Inep. There are also no indications that there has been interference in the choice of questions. Despite this, the educational issue deserves to be closely monitored. The consequences for the future of the country can be very negative if there is no transparency in the management of the Ministry of Education.

The issues related to the environment remain unsolved. In a war of narratives, data leaves little room for distorted interpretations of reality. On the one hand, the government needs to direct resources and attention to combating deforestation in the Amazon; on the other hand, large national companies need to play a role they have not yet paid attention to and implement an effective ESG mindset. Government and society will not be able to turn the corner alone.


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