Spending review may alter unemployment insurance rules

The economic team is weighing reduced payments for workers with larger severance packages and higher contributions from sectors with higher turnover

09/16/2024

Alexandre Manoel — Foto: Rogerio Vieira/Valor

Alexandre Manoel — Foto: Rogerio Vieira/Valor

With a strong job market and low unemployment, the government’s economic team is exploring ways to address what some experts view as double protection for workers dismissed without just cause: unemployment insurance and the 40% severance fine on deposits in the Workers’ Severance Fund (FGTS).

One proposal is to adjust the number of unemployment insurance payments based on the size of the severance fine. Under this plan, the higher the fine, the fewer unemployment insurance installments a worker would receive, creating a balance between the two forms of compensation. Notably, the proposal does not involve altering the FGTS fine itself.

Another idea under consideration is improving the funding of unemployment insurance. This benefit is financed through the Workers’ Support Fund (FAT), funded by a portion of the PIS and Cofins social taxes. The government is exploring the possibility of increasing contributions from industries with higher worker turnover, as these sectors rely more heavily on unemployment insurance. While the Constitution allows for differentiated rates, this provision has not yet been implemented.

These preliminary ideas have not yet been formally presented to the Ministry of Labor and Employment and will need to be refined through discussions with other government sectors, as well as reviewed by key ministers and President Lula. Whether they will become concrete proposals remains uncertain.

These discussions are part of a broader spending review aimed at curbing the rise in mandatory expenditures to ensure the fiscal framework’s sustainability.

The spending review focuses on three key areas: revising social benefits, modernizing automatic rules for budget allocations to specific sectors, and reformulating public policies.

The aim of adjusting government programs is to save resources, address inefficiencies, and improve productivity.

While experts agree that the government’s efforts to strengthen the spending review are moving in the right direction, concerns remain about the implementation of potentially unpopular measures.

“Reforming mandatory spending, such as adjustments to the Continuous Cash Benefit, wage subsidies, or unemployment insurance, is essential to restore fiscal credibility, which has been eroding since the start of the year,” says Alexandre Manoel, chief economist at AZ Quest. He believes the government has fallen short in managing the expectations of economic stakeholders since taking office.

Rafaela Vitória, chief economist at Banco Inter, adds that a reform and consolidation of benefits could positively impact the fiscal outlook in the medium and long term, potentially accelerating fiscal adjustments. “The current structure shows that stronger economic growth has led to faster spending, complicating the adjustment process,” she explains.

Manoel Pires, coordinator of the Fundação Getulio Vargas Center for Fiscal Policy and Public Budget, notes that many of the ideas being discussed are not new. “The issue is not formulating the ideas but getting them on the government’s agenda,” he says. “That has yet to happen.”

Echoing Mr. Pires’ observation, the government is internally resistant to the spending review. One official acknowledged that the economic team’s main challenge is “selling” the concept to the various ministries.

Professor Alberto Handfas from the Federal University of São Paulo (UNIFESP) views the government’s push to cut social program spending as excessive. “I don’t believe this will solve the fiscal tightening issue,” he remarked, suggesting that other expenses, such as the salaries of judiciary officials, high-ranking military personnel, and interest payments, should be addressed first.

In inflation-adjusted terms, the government spent R$52.3 billion on unemployment insurance in the 12 months leading up to July this year. Data from the Ministry of Labor indicates that despite a booming job market, the number of people claiming the benefit has not decreased.

“Unemployment insurance spending has grown by 7.5% above inflation this year, which starkly contrasts the more favorable labor market, characterized by record employment and formal job creation,” says Ms. Vitória. “This discrepancy reveals that the program’s design is not well-suited to the cyclical conditions of the economy, and it imposes a significant fiscal burden, complicating the necessary adjustment of government accounts.”

Ms. Vitória also highlights the overlap between support mechanisms for workers, such as the FGTS fine and unemployment insurance. “This duplication incentivizes turnover rather than fostering job stability.” A government technician echoed this sentiment, explaining that internationally, it’s typical to use one form of support or the other—but not both, as is the case in Brazil.

To qualify for unemployment insurance, beneficiaries must have worked under a formal contract for at least 12 of the 18 months preceding their dismissal when applying for the benefit for the first time. The requirement drops to nine months for a second application, and for subsequent applications, it falls to six months.

The number of installments a worker can receive ranges from three to five months, depending on how many months they were employed. The FGTS severance fine is paid to workers dismissed without just cause.

In cases of dismissal without agreement, the fine amounts to 40% of the total balance in the FGTS account, while it drops to 20% if the dismissal is part of an agreement between employer and employee.

In a booming economy, government experts suggest that many workers strategically seek the FGTS fine and unemployment insurance, confident they can quickly find new employment once their savings are depleted.

“If I’m fired, I can claim unemployment insurance, receive the FGTS fine, withdraw from my FGTS account, collect severance pay, and take accrued vacation plus an additional third. In other words, I leave with a compensation package and a guaranteed income through unemployment insurance. Evidence suggests this creates a tendency among workers to seek redundancy, which in turn encourages turnover,” explained a source.

This dynamic led to the proposal to adjust the number of unemployment insurance installments based on the FGTS fine. According to economic team technicians, this change could result in tax savings while also helping to reduce turnover.

*Por Lu Aiko Otta, Jéssica Sant’Ana — Brasília

Source: Valor International

https://valorinternational.globo.com/
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Runner for São Paulo mayor hits opponent on live TV debate

José Luis Datena assaulted Pablo Marçal with a metal chair, who was rushed to hospital

09/16/2024

José Luiz Datena hit his Pablo Marçal with a metal chair amidst a fierce argument broadcast by TV Cultura — Foto: Reprodução TV

José Luiz Datena hit his Pablo Marçal with a metal chair amidst a fierce argument broadcast by TV Cultura — Foto: Reprodução TV

Physical violence marked a political debate live on television among two runners for mayor of Brazil’s largest city on Sunday evening. TV star José Luiz Datena hit his challenger, digital influencer Pablo Marçal, with a metal chair amidst a fierce argument broadcast by São Paulo state-run TV Cultura. Mr. Datena was immediately expelled from the debate, and Mr. Marçal was rushed to the hospital, where he stayed overnight.

The aggression occurred after Mr. Marçal mentioned that Mr. Datena had allegedly been involved in a past sexual harassment case, which was eventually dismissed. Off-camera, Mr. Marçal repeatedly provoked Mr. Datena, implying that he was a rapist.

Both candidates are newbies in politics. Mr. Datena is a famous journalist and hosts a popular afternoon TV show, considered by many as sensationalist. Mr. Marçal is a far-right digital influencer with millions of followers. Mr. Marçal has been surging in the opinion polls, and is currently in a statistical tie to win with incumbent Ricardo Nunes, and leftist Guilherme Boulos. Mr. Datena has been declining in the polls and rumors have it that he may leave the race.

Tensions between both candidates were high from the start of the debate, and even from previous debates. Mr. Marçal has used the strategy of making serious accusations against all his opponents during the campaign.

On Sunday’s debate, when chosen to ask the first question, Mr. Datena refused to direct it at Mr. Marçal as requested, arguing that his opponent only used the debates to stage a performance for his social media channels. In response, Mr. Marçal brought up the alleged sexual harassment case.

Mr. Datena claimed the case was dismissed due to lack of evidence and retaliated by calling Mr. Marçal a “petty bank thief.” In 2010, Mr. Marçal was sentenced to two years and six months in prison for participating in a group that committed bank fraud, involving the acquisition of victims’ account details for online banking access—he appealed, and the sentence eventually expired.

Off-camera, Mr. Marçal continued to provoke and accuse his opponent. In the fourth segment, after another mention of the harassment case, Mr. Datena approached Mr. Marçal and assaulted him. Mr. Marçal clutched his ribs, indicating pain, and was insulted by Mr. Datena as he left the auditorium.

Mr. Datena wanted to leave the live debate and ended up being expelled. His team watched the scene with surprise and disbelief.

Moderator Leão Serva announced that the debate would be paused and called for a commercial break. The event resumed about three minutes later.

Following the debate, Mr. Marçal’s campaign released a statement: “Pablo Marçal was cowardly attacked by José Luiz Datena, who struck him in the ribs with an iron chair. Unfortunately, Marçal had to leave the debate urgently in an ambulance to receive emergency medical care.”

The campaign expressed regret that the debate continued without the injured candidate. “It is regrettable that the debate continued without the presence of the attacked candidate. Pablo Marçal is injured, with suspected fractures in the thoracic region and great difficulty breathing,” the statement read. “We hope that appropriate legal measures will be taken and we count on the people’s prayers.”

Tassio Renan, Mr. Marçal’s lawyer, reported that the candidate was experiencing rib pain and hand injuries. Mr. Marçal was to undergo imaging tests and remain in the hospital overnight. His Monday schedule would be canceled. The campaign demanded security presence at future debates.

In a statement, TV Cultura expressed regret over the incident and said it took all necessary actions according to the established rules, including expelling Mr. Datena. “Additionally, the debate continued with the agreement of the remaining candidates,” the statement read.

Upon leaving the studio, Mr. Datena admitted to losing his temper. “Unfortunately, I lost my temper. Should I have left? Probably. I could have simply walked out and gone home, which would have been much better. But just as I weep as a human reaction, this was a human reaction I couldn’t contain,” he added. Asked by a TV Cultura reporter if he regretted his actions, he replied, “Of course not.”

Speaking to journalists, Mr. Datena said it was up to the party to decide his candidacy, but he intended to stay in the race. “I intend to remain a candidate until the end. It depends on the party. It depends on everyone. I intend to continue as a candidate,” he said. “Was I wrong? Yes. But what can I do? It’s done.”

The remaining candidates attempted to capitalize on the episode. Tabata Amaral used the assault to highlight the minority status of women in the race. The candidate called the “men’s behavior” in the debate “outrageous” and thanked Marina Helena for being the only one to maintain the debate’s level by asking about proposals for São Paulo’s adaptation to climate change.

Candidate Guilherme Boulos and the incumbent Ricardo Nunes condemned the assault. The São Paulo mayor used his closing remarks to try to attract Mr. Datena’s voters, betting that the TV presenter would exit the race after the attack. “The assault is unjustifiable, but he was provoked and defended his family’s honor,” he said. After the debate, Mr. Nunes, Ms. Amaral, and Mr. Boulos reiterated that Mr. Marçal had provoked Mr. Datena off-camera and called the incident unfortunate.

The debate marked a significant point in the history of televised political battles in Brazil. With no time in the free electoral broadcast slots, Mr. Marçal was constrained by TV Cultura’s rules and struggled to replicate his previous debate strategy, where he had become the center of attention by insulting all his opponents. He encountered Mr. Datena’s emotional instability, evident in the candidate’s recent public appearances and interviews.

*Por Cristiane Agostine, Murillo Camarotto, César Felício, Maria Cristina Fernandes — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Supreme Court justice approves emergency funding for wildfire response

Justice argues that the fiscal costs of wildfires outweigh the expenses needed to combat them

09/16/2024

Flávio Dino — Foto: Rosinei Coutinho/SCO/STF

Flávio Dino — Foto: Rosinei Coutinho/SCO/STF

Supreme Court Justice Flávio Dino authorized the federal government to issue extraordinary credits beyond the fiscal target until the end of the year, exclusively to combat wildfires affecting Brazil.

“We cannot deny the maximum and effective aid to over half of our territory, its respective populations, and the entire flora and fauna of the Amazon and Pantanal, based on compliance with an accounting rule not found in the Constitution, but rather in the realm of sub-constitutional laws,” Mr. Dino stated in his decision on Sunday (15).

Additionally, the justice argued that the negative impact on fiscal responsibility would be more attributable to the erosion of productive activities in areas affected by the fires and drought than to the temporary suspension of fiscal rules through the end of 2024.

Mr. Dino also ordered the relaxation of rules for hiring and retaining wildfire brigades, waiving the current law’s three-month waiting period for rehiring staff who have previously provided service.

The ruling emphasizes the need for increased involvement of the Federal Police in investigating the role of human activity in the majority of the fires in the Pantanal and Amazon regions.

Mr. Dino’s decision followed a warning from the legal advisory office of the Ministry of Planning and Budget about the risks that extraordinary credits for combating wildfires—outside the fiscal framework’s spending limit—could pose to the balance of public finances.

The legal advisory’s terms were included in a submission by the Attorney General’s Office (AGU) sent to Mr. Dino to support the decision to release extraordinary credits for the 2024 budget. Last Tuesday, the justice gave the AGU 48 hours to present its position.

“The impact on macroeconomic indicators, such as inflation, interest rates, and public debt, could be significant, especially if these extraordinary expenses are financed by increased public debt. Therefore, caution is recommended in issuing extraordinary credits, along with compensatory measures to mitigate fiscal and macroeconomic risks, ensuring the sustainability of public finances in the medium and long term,” said Richard Marinho Cavalcanti, coordinator of Budgetary Affairs for the Ministry of Planning’s legal advisory office.

Mr. Cavalcanti further explained that these exceptional resources might force the government to make fiscal adjustments to meet the targets set by the fiscal framework.

“Although these credits are exempt from the spending limits of Supplementary Law 200/2023, they still impact the primary result target established in the 2024 Budget Guidelines Act. This requires strict fiscal adjustments from the government to ensure compliance with this target, under penalty of fiscal imbalance and economic deterioration.”

Wildfires in Brasília

A large wildfire broke out on Sunday in Brasília National Park, also known as Água Mineral Park.

Mauro Pires, president of ICMBio (Chico Mendes Institute for Biodiversity Conservation), said the fire shows signs of being intentionally set. He stated that the blaze began near the Granja do Torto region and quickly spread into the park due to hot and dry conditions.

As of Sunday night, no arrests had been made. “The cause of the fire is undoubtedly criminal. It started at the border of Granja do Torto and spread into the park,” Mr. Pires said.

The firefighting efforts include teams from the Federal District Fire Department and ICMBio brigades. The teams remained on site as of Sunday evening. The park is a vital conservation area, protecting rivers that supply the region.

As of Sunday afternoon, Brazil still had 6,251 active wildfire hotspots, according to data from the National Institute for Space Research (INPE). Pará had the most fires, with 1,765 hotspots, followed by Mato Grosso with 1,150 and Tocantins with 637.

In São Paulo, at least 12 cities had active fires on Sunday, according to the state’s Civil Defense. On Saturday, the state government deployed 20 aircraft with 100% of its resources to combat fires in 13 municipalities.

From January through Saturday, Brazil recorded 182,568 fire hotspots, nearly triple the number in Bolivia, which ranked second with 64,091. Venezuela had 39,000, and Argentina followed with 22,130.

(With information from Folhapress)

*Por Marcelo Ribeiro, Caetano Tonet — Brasília

Source: Valor International

https://valorinternational.globo.com/
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Dispute over collateral intensifies among Azul’s creditors

International debt holders are divided amid negotiations for additional funds

09/13/2024

Airline has begun discussions with lessors and bondholders to find solution to its current financial situation — Foto: Leo Pinheiro/Valor

Airline has begun discussions with lessors and bondholders to find solution to its current financial situation — Foto: Leo Pinheiro/Valor

Groups holding Azul’s international debt bonds are at odds amid negotiations for the airline to raise additional capital, sources informed Valor.

The airline, undergoing a fresh financial restructuring, is seeking to raise between $300 million and $400 million from these creditors by using its logistics arm, Azul Cargo, as collateral.

The primary issue is the discrepancy in the collateral received by various creditors for their past bonds and how these differences might be reconciled to facilitate new capital for the airline.

“Azul has issued multiple bonds with varying maturities and collateral. Some creditors believe these negotiations must take this into account,” an insider revealed. This has led to disagreements within the group, which needs to make a decision regarding the additional funds for the airline.

A report by Debtwire on Wednesday (11) indicated that some creditors had split from the main group and were seeking an advisor, including Oaktree Capital Management.

In a market statement, this group of creditors denied any split but did not detail the internal disagreements regarding the collateral.

“The Ad Hoc Group of Azul Noteholders remains united and intends to engage constructively with Azul,” the group stated. This faction represents about 90% of the senior secured notes maturing in 2028, 2029, and 2030. They also hold 90% of the outstanding convertible notes due in 2028. Cleary Gottlieb Steen & Hamilton LLP and Mattos Filho have been hired as legal advisors, while PJT Partners is serving as the financial advisor.

Azul has started discussions with both lessors and bondholders to find a solution to its current financial situation and to avoid a more extensive restructuring through a Chapter 11 bankruptcy filing. Meetings were held last week in New York.

Valued at approximately $800 million, Azul Cargo is expected to be the main asset used as collateral to raise funds and avoid Chapter 11. This operation would follow the same strategy employed with TudoAzul, the airline’s loyalty program, which was used as collateral for a loan last year.

A source familiar with the talks mentioned that Azul needs an influx of funds this year to gain financial breathing room, and it is most likely that this money will come from its current creditors.

The airline sought its bondholders to raise between $300 million and $400 million.

Joana Bontempo, a consultant and head of corporate restructuring at CSMV Advogados, noted that securing new money from creditors holding different bond issues is typically complex, as the bonds need to be renegotiated to allow new collateral and align divergent interests.

“The different payment priorities and creditor rights need to be accommodated to reach a swift and consensual solution,” she said.

According to sources, negotiations with bondholders are closely tied to discussions with aircraft lessors. This is because the holders of international debt have shown interest in providing more resources to Azul, but this new money cannot be used to pay lessors. Therefore, the debt with the lessors must be settled before new funds can be raised.

As for the lessors, total debts amounted to approximately R$18 billion by the end of the second quarter. Current talks involve five major lessors, who hold over 90% of this debt: AerCap, Avolon, Azorra, NAC, and Falko.

Last year, Azul reached an agreement to renegotiate its debt with aircraft lessors, involving the issuance of $370.5 million in unsecured debt maturing in 2030 at a cost of 7.5%, with an option to receive an additional $570 million in Azul preferred shares, priced at R$36 per share.

As the airline’s stock has underperformed due to exchange rate fluctuations and the crisis in Rio Grande do Sul, Azul has initiated a new round of talks to avoid significant dilution.

Sources indicate that current discussions with lessors involve offering a fixed portion of the company in exchange for converting the debt into equity. The dilution is expected to be around 25%.

Behind the scenes, Azul sees a favorable negotiation window. On one hand, the company is not in default on its bonds, which allows for more amicable discussions. Default situations typically force companies into adversarial positions, giving creditors the power to enforce debts—often leading to Chapter 11 protection filings.

On the other hand, Azul will also benefit from the Brazilian government’s release of the National Civil Aviation Fund (FNAC) as collateral for loans. However, the market expects airlines to officially access these funds only next year.

Azul and Oaktree Capital Management declined to comment.

*Por Cristian Favaro, Fernanda Guimarães — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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São Paulo’s industrial production drops in July after three-month growth

The country’s primary and most diversified industrial hub accounts for approximately 33% of the national industrial output

09/13/2024

Over 12 months through July, Brazil’s overall industrial production rose by 2.2% — Foto: Rogerio Vieira/Valor

Over 12 months through July, Brazil’s overall industrial production rose by 2.2% — Foto: Rogerio Vieira/Valor

Following a cumulative increase of 4.1% over three consecutive months, São Paulo’s industrial production fell by 1.8% in July compared to the previous month, according to the Monthly Regional Industrial Survey (PIM Regional) released recently by the Brazilian statistics agency IBGE.

São Paulo is the leading and most diversified industrial hub in Brazil, contributing about 33% to the national industrial output. This decline significantly impacted the overall performance of Brazil’s industry in July, which saw a decrease of 1.4%.

“The 1.8% drop, exceeding the national average, partially offset the accumulated growth from the previous period. The pharmaceutical sector negatively influenced São Paulo’s production output,” said Bernardo Almeida, who leads the survey.

Despite the decline, São Paulo’s industrial production remains 2.2% above pre-pandemic levels.

Compared to July 2023, São Paulo’s industrial sector grew by 5.4%, which is below the national average growth rate of 6.1%. For the year up to July, the growth was 4.7% in São Paulo and 3.2% across Brazil.

Over the 12 months leading up to July, São Paulo’s industrial production increased by 2.5%, while Brazil’s overall industrial production rose by 2.2%.

*Por Lucianne Carneiro, Valor — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Climate crisis forces insurers to rethink risk calculations

The impact of two months of rain in Rio Grande do Sul was comparable to the more than R$7bn in losses seen over two years of the pandemic

08/13/2024

Pasture burned by fire in the Campinas region, São Paulo: Insurers’ risk assessment models, based on historical series, are becoming less effective in the face of climate extremes — Foto: Luciano Claudino/Código 19/Agência O Globo

Pasture burned by fire in the Campinas region, São Paulo: Insurers’ risk assessment models, based on historical series, are becoming less effective in the face of climate extremes — Foto: Luciano Claudino/Código 19/Agência O Globo

Climate change, with its increasing frequency and intensity of events such as heavy rainfall, heatwaves, and droughts, is pushing the insurance industry to rethink how it manages risk. The growing realization is that this is the “elephant in the room” that insurers must address with urgency.

This shift is essential because what seems to be the new normal is challenging the sector’s traditional business model. “We’re witnessing events that used to occur once every hundred or 200 years happening more frequently. That’s an increase in risk, and when risk increases, insurance premiums rise. As a result, people stop purchasing insurance because it’s become more expensive—precisely at a time when insurance is more critical than ever,” said Marcos Falcão, CEO of IRB(Re), in an interview with Valor. He added that reinsurers will need to improve their valuation and pricing models to adapt. “This is a significant challenge for the entire industry.”

Earlier this year, IRB(Re) established a dedicated research and development unit to focus on climate risks. One of its first actions was hosting a forum in Rio de Janeiro, bringing together public and private sector leaders and researchers to discuss the current situation and explore ways to mitigate and adapt to the effects of climate change.

Not long ago, Brazil was considered relatively free from extreme natural events, unlike other countries, but “now they’ve learned the way here,” said BrasilSeg president Amauri Vasconcelos.

A striking example of this was the heavy rains that battered Rio Grande do Sul between April and May, causing devastation comparable to the impact of the two-year COVID-19 pandemic on insurers. For Mr. Vasconcelos, this highlights the immense destructive power of climate-related phenomena. “An isolated two-month event is nearing the scale of the largest disaster ever covered by the sector,” he noted.

Insurance companies in Brazil have paid out around R$7 billion in compensation related to COVID-19, with BrasilSeg alone disbursing around R$2 billion. In response to the floods in Rio Grande do Sul, the insurance market has paid out R$5.6 billion in claims as of the end of July, with estimates from the National Confederation of Insurers (CNSeg) suggesting that total compensation could reach between R$6 and R$8 billion.

This evolving climate landscape demands that the industry rethink how it assesses catastrophic risk. “We continue to rely on historical data models for risk assessment, but with the climate crisis, it’s clear that we’ve experienced a break in those historical patterns,” said Dyogo Oliveira, president of CNSeg. “This industry has an unmatched ability to manage risk, but we must make a significant effort to prepare the market for this increasing and inevitable challenge.”

Climate scientist Carlos Nobre underscored the urgency of the situation. “Current climate change is widespread, accelerating, and growing more severe. We are seeing record droughts, heatwaves, and wildfires,” he stated.

Mr. Nobre, president of the Brazilian Panel on Climate Change, warned that global temperatures have already risen more than 1.5 degrees Celsius, threatening the long-term survival of the Amazon. He also highlighted the rapid melting of glaciers and rising sea levels, with some areas of the Pacific seeing an increase of 20 to 25 centimeters.

Paulo Miller, an advisor to the directorate of prudential regulation and economic studies at the Superintendence of Private Insurance (SUSEP), described the climate crisis as the “elephant in the room” for the insurance industry. He emphasized that the sector must not approach this with an “extractive mentality”—seeking to exploit the market until it becomes uninsurable—but rather focus on keeping risks insurable by promoting sound risk management practices. “Beyond pricing and selling protection, insurance has a critical regulatory role in fostering good risk management among policyholders,” Mr. Miller explained.

One strategy proposed by insurers to address these challenges is to strengthen collaboration with academia, which generates scientific knowledge, and public authorities, while also promoting a broader insurance culture in the country. “The low penetration of insurance and the insufficient growth rate in Brazil, which falls short of what’s needed to protect our population, businesses, and assets, is a serious concern,” said Mr. Vasconcelos of BrasilSeg. He noted that in Rio Grande do Sul, estimated insurance payouts represented less than 10% of the R$97 billion in economic losses calculated from the recent floods.

In rural areas, losses from climate-related events over the past decade have totaled R$287 billion, with only a fraction, R$56 billion, covered by agricultural insurance or government reimbursements through the Agricultural Activity Guarantee Program (PROAGRO), a 50-year-old agricultural insurance program designed to protect farmers against uncontrollable natural losses. The rest of the losses were absorbed by producers, many of whom were driven to bankruptcy. “Ultimately, the burden falls on civil society. When climate risks intensify, and the insurance culture remains well below the global average, the entire society is affected,” Mr. Vasconcelos emphasized.

Source: Valor International

https://valorinternational.globo.com/
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Mudanças climáticas agravam insegurança alimentar, diz pesquisadora

Encontro na Uerj termina hoje

13/09/2024

A relação direta entre a fome e as mudanças climáticas foi debatida por pesquisadores que se reuniram na Universidade do Estado do Rio de Janeiro (Uerj) nesta semana, no 6º Encontro Nacional de Pesquisa em Soberania e Segurança Alimentar e Nutricional, que termina nesta sexta-feira (13). Coordenadora do evento e professora do Instituto de Nutrição Josué de Castro, da UERJ, Rosana Salles da Costa explica que a insegurança hídrica, por exemplo, pode ser uma consequência das mudanças climáticas que também reduz o acesso à alimentação saudável.

“A segurança alimentar se relaciona a diversas questões. Podemos colocar como uma delas as mudanças climáticas com, por exemplo, o prejuízo no acesso à água em quantidade e qualidade”, explicou à Agência Brasil. “Estamos debatendo no país a questão da segurança hídrica, que, com as mudanças climáticas e as queimadas que estão acontecendo, acaba prejudicando várias áreas de plantio de alimentos produzidos para o consumo nacional”.

A professora ressalta também ser importante observar o aumento do preço dos alimentos, resultado de uma sequência de acontecimentos que dificultam o acesso à alimentação. “Uma vez que você prejudica o plantio e o cultivo de alimentos destinados ao consumo da nossa população, infelizmente, o preço também é afetado. A partir daí, temos que pensar em políticas públicas e em como reverter os efeitos das mudanças climáticas, porque elas estão presentes e temos que pensar agora em como vamos enfrentar as dificuldades relacionadas à segurança alimentar, articulando com os Governos Federal, Estaduais e Municipais medidas de redução da fome e promoção da alimentação saudável.”

Realizado pela Rede Brasileira de Pesquisa em Soberania e Segurança Alimentar e Nutricional (Rede Penssan), o encontro trouxe como tema “Pesquisa e políticas públicas em soberania e segurança alimentar e nutricional no enfrentamento das desigualdades, da fome e das mudanças climáticas”, reunindo pesquisadores nacionais e internacionais, alunos de graduação e de pós-graduação para debaterem as influências das mudanças climáticas no acesso à alimentação adequada pela população.

Segurança alimentar

Rosana Salles da Costa esclarece que segurança alimentar se relaciona ao acesso à alimentação adequada para todas as pessoas de uma família, refletindo o direito humano à alimentação adequada. Por outro lado, a insegurança alimentar se faz presente quando uma das questões relacionadas à alimentação, seja em quantidade ou qualidade, não é garantida. No Brasil, a insegurança alimentar é avaliada a partir da Escala Brasileira de Insegurança Alimentar (EBIA). “Os níveis de insegurança alimentar são três: insegurança alimentar leve, moderada e grave. A insegurança alimentar grave reflete a fome na nossa população, ou seja, famílias que passam o dia todo sem comer ou que fazem uma única refeição ao dia”.

No país, conforme dados da Pesquisa Nacional por Amostra de Domicílios (Pnad) Contínua, referentes ao último trimestre de 2023, 10,8% dos lares comandados por mulheres convivem com a insegurança alimentar moderada ou grave. Considerando os lares chefiados por homens, essa porcentagem passa para 7,8%, revelando uma diferença de três pontos percentuais. Com relação à cor ou raça, 74,6% dos domicílios que enfrentam a insegurança alimentar grave são chefiados por pessoas pretas e pardas.

“Infelizmente, temos o grupo classicamente mais afetado que são os lares chefiados por mulheres, especialmente as mulheres negras”, analisa a professora. “Esse também é um tema de debate de alguns dos painéis e de vários trabalhos do 6º EPISSAN. O encontro não debate apenas resultados, mas também é muito propositivo. Os pesquisadores presentes analisam e fazem propostas de políticas que, principalmente para os lares chefiadas por mulheres negras, são urgentes”, complementa.

Encontro

Além dos debates realizados, foram apresentados durante o evento dados preliminares sobre pesquisas conduzidas no país pela Rede Penssan e com apoio do App VIGISAN, aplicativo desenvolvido pela própria instituição para auxiliar na abordagem aos pesquisados que compõem, muitas vezes, grupos sociais vulnerabilizados. No encontro, também foi apresentada a plataforma FomeS, elaborada com financiamento do Ministério da Saúde (MS) e do Conselho Nacional de Desenvolvimento Científico e Tecnológico (CNPq). A ferramenta agrega dados nacionais sobre mudança climática, insegurança alimentar, insegurança hídrica, saúde e estado nutricional de crianças.

O encontro contou com patrocínio do Ministério da Saúde (MS), do Ministério da Ciência, Tecnologia e Inovação (MCTI), do Ministério do Desenvolvimento e Assistência Social, Família e Combate à Fome (MDS) e da Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES).

*Estagiária sob supervisão de Vinícius Lisboa

*Por Francielly Barbosa* – Rio de Janeiro

Fonte: Agência Brasil

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Chinese brands dodge tax with stock

Despite two tax hikes, Chinese brands have yet to increase prices

09/12/2024

BYD operation at Suape Port in Pernambuco — Foto: Maira Erlich/Bloomberg

BYD operation at Suape Port in Pernambuco — Foto: Maira Erlich/Bloomberg

Since the government announced the gradual reinstatement of the Import Tax on electric and hybrid cars, the tax has been increased twice, in January and July. However, Chinese brands, which are the main importers of these vehicles, have not yet raised their prices. To avoid immediate price hikes, these companies prepared in advance by importing large volumes of vehicles, resulting in sufficient stock to maintain current prices for the time being.

ANFAVEA, the association representing manufacturers in Brazil, has expressed concerns over this situation. Last week, the association’s president, Márcio de Lima Leite, said that the inventory of Chinese electric and hybrid vehicles reached over 86,000 units in June, just before the second phase of the tax increase. According to him, this stockpile was enough to cover nine months of sales. By the end of August, the inventory was still over 81,000 units, Mr. Leite reported.

Since 2016, fully electric cars have been exempt from the Import Tax, and hybrids have been subject to a reduced rate. At the end of 2023, the government announced a phased reintroduction of these taxes. The first two stages of the increase occurred in January and July, bringing the rates to 18% for fully electric vehicles, 25% for hybrids, and 20% for plug-in hybrids. This gradual increase is scheduled to continue until it reaches the maximum rate of 35%, as permitted by the World Trade Organization (WTO), by July 2026.

Noting the strong competition from Chinese brands, ANFAVEA drew parallels with decisions made by other countries, such as the United States, which increased the Import Tax on Chinese goods from 25% to 100%. Consequently, ANFAVEA decided to petition the Ministry of Finance to immediately raise the Import Tax on electric vehicles to the maximum rate of 35%.

So far, the government has not commented on this request. Last week, Vice President Geraldo Alckmin sidestepped questions on the issue during an interview hosted by ANFAVEA.

The interview continued after the minister had left ANFAVEA’s headquarters in Brasília. The same reporter who had questioned him about the tax then posed a similar question to the association’s president. Mr. Leite said that the request to increase the tax to the maximum rate would now be directed to the Foreign Trade Chamber (CAMEX).

This situation has intensified the competition in the Brazilian market between domestic automakers and Chinese brands, which also plan to establish production facilities in Brazil but currently rely on imports. While ANFAVEA represents the domestic side, the Chinese brands are associated with the Brazilian Electric Vehicle Association (ABVE).

On the inventory data presented by ANFAVEA, ABVE President Ricardo Bastos said that the association did not have the exact numbers because its members “have more important things to do than count cars.”

However, Mr. Bastos did not dispute the information, estimating that the figures were likely accurate and considered it “natural” for companies to stockpile in anticipation of a tax increase.

The market for electric and hybrid vehicles continues to grow. With 14,600 units sold in August, including locally manufactured models like those from Toyota, sales volume represented a 57% increase compared to the same month last year.

Although the market share for hybrids and electric vehicles remains small compared to the overall market, it accounted for 6.6% last month. The growth rate remains robust.

The substantial inventories help these brands gain recognition in Brazil as they prepare to start local production. BYD plans to begin assembling vehicles later this year using imported parts in a factory being built in Camaçari, Bahia, at the former Ford site. Great Wall Motors (GWM) is preparing the facility it acquired from Mercedes-Benz in Iracemápolis, São Paulo, to commence operations in the first half of 2025.

Competition in the Brazilian vehicle market is expected to remain fierce, especially with increased credit availability driving demand.

In August, the daily average of new registrations reached 10,800 units, the highest of the year and a 19.5% increase over August 2023, according to ANFAVEA. Domestic sales totaled 237,400 units, including cars, light commercial vehicles, trucks, and buses, marking a 14.3% increase compared to the same month last year.

From January to August, the total market grew by 13.3%, totaling 1.62 million units. In the same period, sales of hybrids and electric vehicles reached 109,200 units, a 123% increase compared to the same period in 2023.

*Por Marli Olmos, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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House passes bill establishing compensation for payroll-tax cut

Bill that makes it possible to continue exempting 17 labor-intensive sectors and municipalities from paying taxes is now on its way to presidential assent

09/12/2024

The Lower House passed the bill with the support of 253 legislators, while 67 voted against
The Lower House passed the bill with the support of 253 legislators, while 67 voted against — Foto: Brenno Carvalho/Agência O Globo

Despite passing the main text and rejecting amendments, the Lower House adjourned early Thursday without fully approving a bill that ensures the continuation of payroll tax exemptions for 17 labor-intensive sectors and municipalities while establishing compensation mechanisms for the measure. The proposal also includes a gradual reintroduction of taxes for these sectors and municipalities starting in 2025. The low quorum was a key factor in the session’s adjournment.

A new session has been scheduled for this Thursday to consider an agreed-upon amendment to address the Central Bank’s concerns and finalize the text. The bill will be sent to President Lula for approval after these steps.

The main text was passed late Wednesday with the support of 253 legislators, while 67 voted against and there were four abstentions.

The review of the text began on Wednesday night, which was the deadline set by the Supreme Court for the government and Congress to formalize an agreement to maintain the payroll tax-cut program.

Negotiations

Hours before the vote, a meeting between Finance Minister Fernando Haddad, House Speaker Arthur Lira, and party leaders sealed the agreement that allowed for the bill’s consideration.

It was decided that forgotten funds in financial institutions—approximately R$8.6 billion—would have only an accounting effect and would not be included in the calculation of the primary result.

This agreement was made to address the Central Bank’s concerns, which had sent a note to lawmakers the day before expressing worries about incorporating these funds as part of the compensation for the federal revenue loss. According to the Central Bank, such incorporation would not align with its statistical methodology and would contradict guidelines from the public spending watchdog TCU and recent Supreme Court rulings.

The opposition attempted to obstruct the session, but motions to delay the vote were rejected by the majority of lawmakers.

Before the vote, Vivien Suruagy, president of the National Federation of Call Centers, Installation and Maintenance of Telecommunications Network Infrastructure (FENINFRA), expressed concern that the issue might not be resolved within the Suprem Court’s deadline.

“Congress needs to put an end to the legal uncertainty we’ve been dealing with since the government vetoed the tax cut,” she said in a statement.

In a last-minute change, congressman Any Ortiz relinquished her role as rapporteur, which was then assigned to the government’s leader in the House, José Guimarães.

“For about a month, I’ve been urging for this matter to be brought to a vote. Everyone knows the content of this matter. It came to the House days ago and only today was the rapporteur appointed. I warned that the deadline was approaching,” Mr. Guimarães said.

In April, Justice Cristiano Zanin initially suspended the tax exemption, which would have immediately reinstated the tax on the affected sectors. However, a few days later, he issued a new ruling granting 60 days to find compensation sources for the measure—a decision confirmed by the full court. The deadline was later extended until Wednesday.

As the vote extended into early Thursday, the Federal Attorney General’s Office (AGU) requested that the Supreme Court grant an additional three business days for President Lula to sign the bill. “As today is the deadline for the decision’s prospective effect granted by this Supreme Court, it is necessary to grant an exceptional extension of three business days solely to complete the legislative process in its final stage of presidential approval or veto. Therefore, we respectfully request an extension of the suspension period and the prospective effects of the decision for an additional exceptional three business days, solely to finalize the legislative process as regulated by Article 66 of the Constitution (approval/veto),” the request said.

Current Situation

Currently, the payroll tax-cut model allows for the payment of rates ranging from 1% to 4.5% on gross revenue. This tax substitution model is more suitable for labor-intensive sectors. Together, the 17 exempted economic sectors generate around 9 million jobs.

Under the bill proposed by the economic team after an agreement with the National Congress, the payroll tax will gradually return starting next year. It will be 5% in 2025, 10% in 2026, 15% in 2027, and 20% in 2028.

The payroll-tax cut model for economic sectors was introduced in 2011 to stimulate job creation. Since then, it has been extended several times. Last year, Congress extended the measure until the end of 2027. Additionally, it allowed municipalities with populations under 156,000 to reduce their social security contributions to 8% from 20%.

The text was vetoed by President Lula, but Congress overrode the veto, leading to the series of events that reached the Supreme Court.

*Por Marcelo Ribeiro, Raphael Di Cunto, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/
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BlackRock-backed firm secures R$400m for solar power generation

First R$200m already withdrawn by the company

09/12/2024

Ty Eldridge — Foto: Rogerio Vieira/Valor

Ty Eldridge — Foto: Rogerio Vieira/Valor

Brasol, a renewable energy company primarily funded by BlackRock and Siemens, has announced its first issuance of simple debentures, amounting to R$400 million, to finance its growth plan through the construction or acquisition of new solar plants in the distributed generation segment.

CEO Ty Eldridge told Valor the focus is on infrastructure projects up to R$25 million targeting larger consumers such as industrial clients, telecommunications, and sanitation services. Bradesco BBI advised Brasol on the operation.

“The funds will be crucial for the development of strategic assets and new projects. This is also the reason for diversifying our solutions, as solar energy alone will not meet all of our clients’ needs. Hence, we are exploring battery storage solutions,” Mr. Eldridge added.

Despite the presence of numerous companies in Brazil’s distributed generation sector, the market is consolidating around a few key players acquiring projects, such as Brookfield, Origo, Matrix, and Patria.

At the end of 2023, BlackRock acquired a 45% stake in Brasol. With this investment, the plan is to allocate a significant portion of the capital for acquisitions, aiming for approximately R$1 billion in investments in the company. Brasol’s chief investment officer, Carlos Eduardo de Lima Bacha, noted that with BlackRock’s capital and other partners, along with the debenture issuance, the company now has the necessary funds to pursue these projects.

“We went to the market with a public operation and raised funds for Brasol, giving us discretion in allocating the money for future projects,” Mr. Bacha said. “Part of the funds will be used for purchasing equipment and constructing plants, as well as for consolidation through M&As [mergers and acquisitions],” he added.

The company currently has around 150 megawatt-peak (MWp) distributed across 22 states and aims to reach approximately 500 MWp of installed capacity by the end of 2025. The strategy involves utilizing Brasol’s equity, shareholder contributions, and other financial structures. The first R$200 million has already been withdrawn and is available for upcoming opportunities.

Recently, the company finalized an agreement to acquire solar farms from energy trader BC Energia. Initially, this partnership will involve controlling 13 projects with a generation capacity of 60 MW, requiring investments of R$250 million. The plan is to acquire 35 solar plants, demanding investments of R$800 million, as reported by Pipeline, Valor’s business news website.

This financial arrangement is not unprecedented. Raízen sold 31 solar projects to Élis Energia, a company controlled by Pátria Investimentos. Brookfield injected R$1.2 billion to establish a 300 MWp generation park through its subsidiary IVI Energia, with an undisclosed amount, and continues with the construction of future plants. Additionally, Origo Energia, backed by I Squared, raised R$600 million to finance the construction of around 150 small solar plants in 11 states.

Camila Ramos, CEO of Clean Energy Latin America (CELA), a consultancy specializing in the renewable energy sector, noted that remote generation projects have been using several financial instruments, including equity from investors, commercial and development bank financing, as well as capital market instruments such as Real Estate Receivable Certificates (CRIs) and credit rights investment funds (FIDC), simple debentures, and more recently, incentivized debentures.

“According to Cela’s annual survey of financing volumes for distributed generation in Brazil, this volume fell for the first time in 2023. However, in 2024, the financing market rebounded and is expected to show higher volumes than the previous year,” Mr. Ramos said.

*Por Robson Rodrigues — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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