What is happening in Brazil?
1. Politics – The Federal Senate approved the Transition PEC on Wednesday (7). With a vote in two rounds, Senators approved, by 64 votes in favour, the proposal that raises R$ 168 billion spending ceiling for the next two years. The text was sent for consideration in the Chamber of Deputies and should be voted on until Wednesday (14).
President Jair Bolsonaro (PL) spoke to supporters on Friday (9) in front of the Alvorada Palace, the official residence. He stated that “everything will work out in due course”. The statement marked the end of the silence that Bolsonaro had been adopting since November 2.
President-elect Luiz Inácio Lula da Silva announced, on Friday (9), the names of five ministers of his government. The chosen were Fernando Haddad (Economy), Rui Costa (The President’s Chieff of Staff), José Múcio Monteiro (Defense), Flávio Dino (Justice) and Mauro Vieira (Foreign Affairs).
Source: O Estado de S. Paulo
Senator Eduardo Girão (Podemos-CE) and Senator-elect Rogério Marinho (PL-RN) have announced their candidacies for the presidency of the Senate. In common, the candidacies are trying to defeat Rodrigo Pacheco (PSD-MG), supported by President-elect Lula (PT).
2. Economy – Copom kept interest rates at 13.75% per year.
In November, official inflation measured by the National Wide Consumer Price Index (IPCA) was 0.41%, the lowest rate for the month since 2018. The result positively surprised the market. The rate in 12 months decelerated to 5.90%.
PepsiCo will invest R$ 1.2 billion in Brazil in 2023, as part of the plan that foresees doubling in size. It is the largest annual investment of the multinational in its 70 years of activity in the country.
Vehicle production rose 4.9% in November compared to the same month in 2021.
The estimate for Brazilian grain production in the 2022/23 harvest foresees an output of 312.2 million tons. The volume exceeds by 15% the harvest of the 2021/22 crop, which recorded 270.9 million tons. The data are from the third crop survey, released by the National Supply Company (Conab) on Thursday (08/12).
3. Public Administration – President-elect Luiz Inácio Lula da Silva received the United States National Security Advisor, Jake Sullivan, on Monday (5).
Ibama (Brazilian Institute of Environment and Renewable Natural Resources) launched the DOF+ Traceability system on Wednesday (7). The solution contributes to the fight against illegal deforestation.
1. The political trend is uncertain. Even with the protests in the quarters and Bolsonaro’s recent enigmatic pronouncement, the institutional tension continues to decrease. The new government has also advanced with the announcement of ministers, and the official graduation of Lula and Alckmin consolidates a critical stage. Although there is a perception that Lula’s parliamentary base has already been assembled, with the approval in a record time of the Transition PEC in the Senate and the PT’s friendly relationship with Arthur Lira in the Chamber of Deputies, this idea is still being formed.
The construction of the parliamentary base that could offer good conditions of governability to Lula 3.0 is complex and comprises several stages. Each stage has its own logic, permeated by interests and political compositions that require successive accommodations. The first of these evolutions is the composition of the ministries, something we have already talked about here several times, including in less visible structures, such as directors and managers, state companies and municipalities. The second aspect is characterised by the dispute for the positions that make up the formal structure of the Chamber of Deputies and the Federal Senate. Whoever occupies these legal leadership positions will have great power over the legislative agenda. A third aspect is a variation in power that Congress has gained over the Executive, crystallised in the parliamentary funds. With a re-election rate of almost 60%, federal deputies should resist change. All these variables will be fundamental to constructing the government’s parliamentary base.
2. The economic trend remains positive. Although the maintenance of the Selic rate at 13.75% was already expected, Copom drew attention to the increase in fiscal risks. There are rumours that the Transition PEC could be limited to only one year, not two, as initially predicted. Arthur Lira seems to have agreed on the movement with PT leaders. It could mean a reduction in fiscal uncertainties.
Also positive was the news that the IPCA was below expectations in November. The market remained indifferent to Haddad’s nomination for the Ministry of Economy.
3. Public Administration continues with a negative trend. The transition of the government promises to change a significant number of occupants of leading positions in the Direct Administration. The reorganisation of the new ministries should last a few months in 2023.
The blog returns in 2023!