May 17th, 2024


1. BRICS will allocate billions of reais to help victims of the climate disaster in Rio Grande do Sul

On Tuesday, the New Development Bank (NDB, or BRICS Bank) – which is now chaired by Brazil’s former president Dilma Rousseff – announced it will allocate R$ 5.75 billion to fund infrastructure reconstructions in Rio Grande do Sul.

According to Dilma, the total amount was determined after conversations with President Luiz Inácio Lula da Silva (PT) and Rio Grande do Sul State Governor Eduardo Leite (PSDB). The funds will be transferred directly to the state as well as through partnerships with other financial institutions. Half of the amount will fund small and medium enterprises, while the other half will be reserved for environmental and disaster prevention works.

G1: Banco do Brics vai destinar R$ 5,7 bilhões à reconstrução do RS após chuvas
UOL: Banco do Brics vai destinar mais de R$ 5,7 bilhões para o RS

2. Financial market predicts a 0.25 point cut to the basic interest rate

Experts in the financial market believe the basic interest rate will be reduced again. Over 90% of market analysts interviewed by the Central Bank before a meeting by the Monetary Policy Committee (COPOM) believe there will be a 0.25 percentage point reduction.

The meeting minutes, published this week, do not indicate what the Committee will decide. In the document, every member is mentioned as believing that monetary policy must be restrictive and carefully implemented, and that no guidance should be provided for the next meeting.

O Globo: Mercado prevê novo corte de 0,25 dos juros pelo Copom em junho
Info Money: Ata do Copom deixa espaço para BC pausar corte de juros em junho, dizem economistas

3. Economic activity drops by 0.32% in March

Brazilian economic activity dropped more than expected in March, but the third quarter of 2024 still registered growth. The results reveal the economy is doing well, with family consumption on the rise thanks to the job market and inflation under control, according to the Central Bank.

The Central Bank’s Economic Activity Index (IBC-Br), considered to be an indicator of the Gross Domestic Product (GDP), dropped by 0.34% in March compared to the previous month. According to Reuters research, there was an expectation of a 0.25% drop, and the result was the first drop after four months of growth. Still, the index ended the first quarter of the year with 1.08% growth.

CNN: “Prévia do PIB”: IBC-Br recua em março, mas termina 1º trimestre em alta de 1,08%, diz BC

4. Petrobras loses R$ 35 billion in market value after the president is fired

Petrobras lost R$35.3 billion in market value after it was announced that Jean Paul Prates had been fired as president of the company. President Luiz Inácio Lula da Silva personally fired Prates soon after the controversy surrounding the company’s dividend distribution.

The next president of Petrobras, Magda Chambriard, was formerly the general director at the National Agency for Petroleum, Natural Gas and Biofuels (ANP) during the Dilma Rousseff (PT) administration. She is also a consultant on oil, gas, and biofuels and has worked at Petrobras for over 20 years.

Correio Braziliense: Petrobras perde R$ 33 bi em valor de mercado até as 15h após demissão de Prates
G1: Lula demite Jean Paul Prates, presidente da Petrobras

5. Chamber of Deputies approves creation of Development Credit Bill and alters LCA rules

On Tuesday, by a margin of 339 votes against 96, the Chamber of Deputies approved the bill creating the Development Credit Bill (LCD). This new fixed-income title will be offered to investors by public development banks with income tax exemption. The bill will now be analyzed by the Senate.

The Lula administration proposed the creation of the LCD to expand funding sources for the National Economic and Social Development Bank (BNDES). The new fixed-income titles will have a tax exemption similar to LCA and Real Estate Credit Bills, meaning investors will not pay income tax or be charged with the Tax over Financial Operations (IOF). The government expects a R$ 312.5 million loss in tax collection in 2024, R$ 937.4 million in 2025, and R$ 1.2 billion in 2026.

Valor: Câmara aprova criação de Letra de Crédito de Desenvolvimento e altera regra para LCAs