November 22, 2019


1. President backs down and suggests a “soft” Administrative Reform

The Administrative Reform was supposed to get to Congress fast, but President Jair Bolsonaro backed down. Even though the proposal was intended to be presented to Congress on Tuesday, it will now be sent next year. The Reform will affect jobs and salaries in the public service sector, including judges, prosecutors and federal police officers. Since Operation Car Wash, these groups have earned strong support from the people, who can put pressure on members of Congress. The Reform plans to reduce the number of jobs available in public service, change the rules for job stability and establish a new base salary. According to the President, it is “obvious” that they have to wait for the best moment to submit the proposal to Congress and that it will be done “as smoothly as possible.” According to a study by the World Bank, the initial salary reduction in public service would be R$ 5,000 (USD $1,196) and changes in jobs could result in savings of R$ 104 billion (USD $25 billion) for the administration by 2030. According to the study, 44% of public servants would begin their careers earning over R$ 10,000 (USD $2,393). Currently, the administration manages 650,000 public servants. Read the analysis of the administration backing down on the Administrative Reform at Brasília Report.

FolFolha de S.Paulo: Governo prevê Reforma Administrativa para 2020
O Estado de S.Paulo: Reforma Administrativa será mais suave, afirma presidente
O Estado de S. Paulo: Elite do funcionalismo se mobiliza contra mudanças

2. Deforestation grows 29.5% in the Amazon, the highest rate in the decade

According to the National Institute for Space Research (INPE), from August 2018 to July 2019 the rate of deforestation in the Amazon was the highest ever registered in the decade. During these 12 months – seven of them under Jair Bolsonaro’s administration – 9,762 km² (6065 mi²) of the forest was destroyed, a 29.5% increase in comparison to the previous year. It is the third largest increase in destruction ever registered, behind only deforestation increase rates in 1995 (95%) and 1998 (31%). Deforestation happens mostly when landowners remove the natural vegetation of the land without the government’s authorization or when land belonging to the government or private owners is invaded by loggers. Out of the nine Brazilian states that contain the forest (Acre, Amapá, Roraima, Tocantins, Maranhão, Amazonas, Mato Grosso, Pará and Rondônia), Amazonas, Mato Grosso, Pará and Rondônia were responsible for 84% of the total area destroyed: 8,213 km² (5103 mi²). According to the President, “this is a cultural problem”, but pressure from other countries is not welcomed. “How is Brazil right now when it comes to the environment? 61% of the forest is preserved. Which other country in the world can say the same? None,” he said. “Without the agribusiness you [journalists] would eat grass,” he said. Environment Minister Ricardo Salles said at least R$ 1 billion (USD $240 million) of the ministry’s budget will be used to fight deforestation. In a speech featuring a very different tone from the speech he gave the previous week, Salles admitted that he will ask for financial help from the Climate Conference (COP-25), which will take place in Madrid, Spain, from December 2nd to 13th.

Folha de S.Paulo: Desmatamento na Amazônia bate recorde e cresce 29,5%
O Estado de S. Paulo: Ministro vai pedir dinheiro na Conferência do Clima
Folha de S.Paulo: Sem agronegócio, imprensa vai comer capim, diz presidente

3. Bolsonaro’s party associates itself with religion, family and guns

President Jair Bolsonaro’s new party is still trying to gather the 500,000 members it needs in order to be recognized by the Electoral Justice. On Thursday, the party published its manifesto and political guidelines. Aliança pelo Brasil (Alliance for Brazil) says that it will be a conservative party, “committed to order and freedom,” said lawyer Karina Kufa when she read the party’s manifesto in Brasília. If recognized by the Justice Department, the party number will be 38, the same number as the caliber of the most popular revolver in the country. The party says it is committed “to the respect of God and religion”, “follows the values of the Gospel” and “supports the right to carry a gun”, as well as promising to protect children from “eroticism in childhood and gender policies.” Bolsonaro, who is no longer a member of PSL, will be the president of the new party. The party is trying to get approval to run in the 2020 elections. “It will be the largest party of Brazil, so help us God,” said Flávio Bolsonaro.

Folha de S.Paulo: Partido 38 defende armas, Deus e família
O Estado de S. Paulo: Aliança pelo Brasil defende Deus e se opõe ao comunismo

4. Tax on money sent abroad will increase in 2020

The Ministry of Tourism has presented a proposal to change the Income Tax rate on money sent abroad. The Preventive Measure proposal would increase the tax on the money being sent from 6% to 15.5%. The proposal needs to be signed by President Jair Bolsonaro to make it valid for 120 days, or until Congress approves it. According to the Ministry, charges on money transfers made to cover the costs of leisure trips, businesses or official government missions was set at 6% in March 2016. The rate expires in December and could be increased to 25%. The proposal suggests raising the rate to 7.9% in 2020 and subsequently implementing annual increases. In 2010. the tax on money sent abroad was 25%, but this was altered and, in 2016, the government decided to reduce it to 6% with Congressional approval.

O Estado de S. Paulo: Imposto para remessas ao exterior pode subir em 2020

5. Chinese appetite makes Brazilian beef 5.26% more expensive

According to a study by Fundação Getúlio Vargas (FGV), an increase in exports of beef to China caused a 5.26% rise in prices of meat for the Brazilian people. The Chinese are buying more Brazilian beef due to the African Swine Fever. Exports to China increased 23.6% by October, with Brazil exporting 1.47 million tons of beef to the country. The number of companies authorized to sell to China increased from 16 to 40. According to FGV, the price of beef tends to drop after January due to the end-of-year holidays. Sirloin steak, for example, had a price increase of 6.04% last month, even though annual inflation is at around 4.25%.

O Globo: Exportação encarece preço da carne bovina no Brasil

Brasilia Report

Click here for the Brasilia Report, a weekly analysis prepared by JeffreyGroup Senior Advisor in Brasilia, Gustavo Krieger.