Increase of 8.9% in revenue aids performance; secretary highlights challenges for 2025
01/31/2025
The Brazilian federal government met its primary budget target for last year, thanks to both increased revenue collection and reduced expenditures. However, National Treasury Secretary Rogério Ceron emphasized the necessity for the federal government to improve the primary balance by 2025. He also noted that recent changes in both external and domestic scenarios might “require more effort on our part” to balance public finances.
The central government ended last year with a primary deficit of R$44 billion, equivalent to 0.36% of GDP, according to the National Treasury Secretariat (STN). Excluding expenditures not considered in the target calculation, such as spending to combat the effects of floods in Rio Grande do Sul, the deficit was R$11 billion, or 0.09% of GDP. The target for 2024 was a zero deficit, with a tolerance range of 0.25 percentage points of GDP, either above or below, or approximately R$28.8 billion.
Earlier this month, Finance Minister Fernando Haddad stated that the central government would meet the target, forecasting a deficit of about 0.1% of GDP. This Friday (31), the consolidated public sector results calculated by the Central Bank, covering the federal government, states, municipalities, and non-financial state-owned enterprises, except Petrobras and Eletrobras, will be released.
The Central Bank figures are also expected to confirm that the nominal deficit remains at a concerning level, around 8% of GDP, ranking among the highest globally. Unlike the primary result, this figure includes interest payments on public debt and is closely monitored by analysts as it determines the country’s debt dynamics. For this year, the nominal deficit is expected to range between 8.5% and 9% of GDP.
According to Thursday’s Treasury data, the 2024 outcome was influenced by a real growth of 8.9% in net revenue. This increase was driven by both tax collections managed by the Revenue Service, which rose by 12.5%, and non-managed collections, which grew by 3.6%. In the latter case, revenues from participations and dividends, particularly those from the National Bank for Economic and Social Development (BNDES), which paid R$18.7 billion more than the previous year, played a significant role.
On the expenditure side, there was a 0.7% decline, mainly due to a R$39.8 billion reduction in spending on judicial rulings and writs of payment. However, mandatory expenses such as the Continuous Cash Benefit (BPC) and flow control continued to rise, with increases of R$14.7 billion and R$16.4 billion, respectively.
In a press conference detailing the figures, Mr. Ceron highlighted that the 2024 primary result was the second-best of the last decade, stating that “it is undeniable that the [fiscal] recovery process has been intense” over the past two years.
“The first year of the fiscal framework was extremely satisfactory,” he remarked, referring to 2024.
However, he acknowledged that “we need to improve” compared to last year, indicating that a reduction from the 0.36% deficit recorded in 2024 would signify improvement. The target for this year also aims for a zero deficit, with a tolerance of 0.25 percentage points.
Mr. Ceron also mentioned that given recent changes in the economic landscape, it might be necessary to reopen “the debate” on new measures to adjust public accounts. On the international front, he cited the Federal Reserve’s decision to “pause monetary easing.” On Wednesday (29), the Fed maintained the federal funds rate at a range of 4.25% to 4.5% annually.
The Treasury Secretary also identified Brazil’s interest rate as a source of fiscal pressure. Since mid-December, the Central Bank has raised the Selic rate by 200 basis points to 13.25% per year and signaled another one-point increase for the March meeting. According to Mr. Ceron, these changes suggest that “fiscal challenges may be intensified.”
Mr. Ceron also addressed President Luiz Inácio Lula da Silva’s statement that he would only implement new fiscal measures if necessary. According to the secretary, this was a “positive signal” confirming that the government will do what is required to achieve fiscal balance, while also reflecting “a legitimate concern [of the president] to preserve public policies” for the most vulnerable population.
The secretary dismissed the possibility of the Brazilian economy being in a fiscal dominance scenario, which occurs when public debt is so high that interest rate hikes could have the opposite effect on inflation, further pressuring price trajectories.
Nonetheless, Mr. Ceron stated, “we need to collaborate” to limit the Selic rate hike cycle. “The sooner we can provide correct signals, the shorter the cycle will be,” he added.
*By Estevão Taiar, Guilherme Pimenta e Ruan Amorim — Brasília
In January, the gap between sales growth in value and volume widens; diesel price hike still ahead
01/31/2025
Inflation is forcing Brazilians to further revise their shopping baskets, already impacting the pace of sales volume growth in stores in 2025, according to an exclusive NielsenIQ (NIQ) report obtained by Valor.
The expansion rate of units sold in January, compared to the same period in 2024, dropped to 2.4% from 11.2% over roughly 20 days, from the first to the third week of the month.
Another exclusive study by Scanntech shows that over the past six months, half of the volume growth seen in early 2024 has been erased. This means inflation has already forced Brazilians to give back part of the gains achieved just months earlier.
Amid weakening consumption, the Northeast states—where the government’s key voter base is concentrated—are the only region among those analyzed where supermarket and hypermarket sales are declining simultaneously. Only cash-and-carry stores posted growth in the third week of January compared to the previous year, according to NIQ.
For the past two weeks, this trend has been raising concerns in the government, which is seeking short-term measures to slow price increases. The negative impact of inflation on President Lula’s popularity, as highlighted by a Quaest poll on Monday (27), is a key concern. On Tuesday, Mr. Lula publicly addressed rising prices.
The surveys have yet to account for the impact of Petrobras’s recent diesel price hike, which is expected to drive up food transportation costs in a country where distribution relies heavily on highways, further pushing prices upward.
According to NIQ’s weekly tracking, based on sales data from partner retail chains, the total units sold slowed at a faster pace than revenue growth in the first three weeks of January—a typical sign of accelerating shelf inflation.
In the first week of the month, revenue was up 20.4%, while unit sales increased 11.2% year-over-year. By the second week ending January 12, volume growth slowed to 9.9%, while revenue expanded by 16.4%.
Over the following seven days, until January 19, the trend shifted further: revenue rose 9.4%, but the number of units sold increased by only 2.4%—just a quarter of the previous week’s pace and far below the nearly 20% growth seen at the start of January.
For the CEO of a wholesale retailer, this modest 2% growth represents the “new normal” for sales volume in an environment of repeated price hikes.
“What we saw at the beginning of January, with double-digit growth, was an anomaly. There was a strong replenishment purchase because the year started in the middle of the week, which typically boosts restocking sales,” he said. “I think we’ll see more of this 2%-2.5% growth throughout the year, and that’s weak.”
This slowdown occurred just before President Lula warned his ministers in a January 21 meeting that workers were feeling the pinch of rising prices and urged swift action.
“We’ve seen supermarkets trying to plan purchases further in advance with suppliers to keep inventory levels as low as possible [to reduce fixed costs]. This has been happening since October. There’s also been a push for greater brand variety to balance price increases,” said Marcio Milan, vice president of ABRAS, the retail food association.
Mr. Milan estimates that prices in stores rose about 1% in January alone. The association is in ongoing negotiations with the government to find ways to curb accelerating prices, though there is skepticism within the sector about the effectiveness of such measures.
Gabriel Fagundes, director of industry insights at NIQ, said while the first two weeks of January were positive, the subsequent slowdown was driven by price hikes linked to the rising dollar. Many raw materials and agricultural commodities are priced in the U.S. currency.
New price lists began arriving in stores between December and January. “The data shows a widening gap between value growth and units sold, which is driven by price increases,” Mr. Fagundes noted.
Price gap
Between November and December—the holiday shopping and Black Friday period—average revenue in retail, wholesale, and pharmacies grew 6.3%, while unit volume increased just 1.2% year-over-year, according to Valor’s calculations based on monthly data.
Thus, as Mr. Fagundes pointed out, there was a roughly 5-percentage-point gap between the figures, reflecting inflation and shifts in product mix. This gap has widened further in 2025.
By January 19, the accumulated gap had reached 7.5 percentage points—sales in value terms grew 15.5%, while unit volume increased only 8%. “We need to see how much wider this gap will get. If it keeps growing, it could signal additional price hikes ahead. February brings increased demand for beverages and personal care items [due to Carnival], which are also sensitive to dollar fluctuations,” Mr. Fagundes said.
The wholesale CEO noted a positive development: the recent drop in the dollar’s exchange rate, which he believes could ease pressure for further price hikes in the industry.
Mr. Fagundes emphasized that more data is needed to determine volume trends for early 2025 but confirmed that price increases are becoming more widespread. He noted that the latest hikes are compounding existing inflationary pressures from late 2023.
Economists had previously warned that household budgets were being squeezed by persistently high price levels in 2024. Now, additional increases on top of those levels are evident, depending on the product category.
NIQ’s survey covers the so-called modern retail segment, which includes supermarkets, hypermarkets, cash-and-carry stores, and pharmacies—accounting for 80% of national consumption. It does not include smaller independent retailers, which make up the remaining 20% and typically do not influence broader market trends.
Consumer behaviour
The food retail and pharmacy sectors generate R$1.6 trillion annually, representing just over 60% of the country’s total restricted retail sales.
This inflationary acceleration is partly due to agricultural crop failures, climate issues, and new waves of price hikes across various product categories, including dollar-linked raw materials.
Between late October and early January, the exchange rate per U.S. dollar rose 7.3%. Since then, it has fallen 5.6%. The exchange rate surpassed R$6.20 on January 2, following a loss of government credibility after announcing insufficient fiscal adjustment measures to restore public finance order.
Since November, retailers and food, hygiene, beauty, and cleaning product manufacturers have been negotiating price adjustments of 5% to 10%, depending on the category, as previously reported by Valor.
According to Scanntech’s internal data analysis, currency-sensitive supermarket items accounted for 76% of total food retail price increases in the fourth quarter of 2024.
Another key finding is how consumers are responding at points of sale.
The Northeast states were the only region among the seven analyzed by NIQ in January where supermarket and hypermarket sales declined simultaneously. Hypermarket sales fell 16% from January 13-19 compared to the previous year.
Only cash-and-carry stores grew during this period in the region (9.2%), offering prices 5%-10% lower than other retailers.
Scanntech Brasil’s data, based on transactions from 45,000 partner stores, indicates that Brazil has reversed recent consumption gains. In the fourth quarter, sales volume fell 0.7%, following a 1.2% decline in the third quarter. This contrasts with the first and second quarters, when volume grew 3% and 1%, respectively.
This outlook echoes past downturns, though not as severe as in 2015-2016 during the Dilma Rousseff administration, when industries and retailers lost years of growth due to declining sales and revenue.
Priscila Ariani, marketing director at Scanntech Brasil, estimates that, in the fourth quarter of 2024, Brazilians saw a 5.7% decline in purchasing power, driven by a 9.3% increase in average food retail prices, while average income rose by just 3.1% for the year. “With price pressures persisting into January, purchasing power is expected to take an even greater hit,” she said.
“Shrinkflation”
Ms. Ariani highlighted another trend: consumers shopped more frequently in 2024 but bought less per trip to hunt for deals.
Calculations show that from January to December 2024, food retail sales in value terms increased by 5.2% compared to 2023, driven primarily by a 4.7% rise in prices over the year. The remaining 0.5% of growth came from a higher sales volume.
In other words, over 90% of the revenue expansion resulted from price adjustments on store shelves. As for units sold, the modest 0.5% increase was supported by a 2.3% rise in in-store traffic, which contributed to the overall index.
She also pointed to “shrinkflation,” where manufacturers reduce package sizes while maintaining prices, embedding an often unnoticed inflationary effect that impacts consumers’ wallets.
In 2024, the average product package size shrank by 0.9% compared to 2023, while consumers increasingly opted for smaller, lower-weight products to cut costs.
“This 0.9% reduction may seem minor, but in a market that moves tonnes of goods annually and generates nearly R$1.4 trillion in food sales, it is far from insignificant,” Ms. Ariani explained.
A leading wholesale club in São Paulo reports that packaging downsizing has already led to a 3% decline in the volume sold in 2024.
“If you factor in the reduction in product quantities per package and subtract it from the overall volume increase for the year, the total tonnage sold in Brazil is actually lower than reported,” a source said.
According to the Scanntech Brasil’s study, around 83% of grocery product categories saw packaging sizes shrink by late 2024, leading to a 4.5% drop in volume sold.
Ms. Ariani highlighted that this trend impacts business predictability and planning, affecting investment decisions throughout the year—an issue also flagged in analyst reports. Since the pandemic, rising interest rates and inflation-driven cost pressures have led some retail chains to scale back expansion plans and new store openings.
This article was translated from Valor Econômico using an artificial intellig
Number of convictions increases, but challenges in effectively punishing crises persist, survey finds
01/31/2025
A study recently released by the Amazon Institute of Man and Environment (Imazon) reveals that only 5% of convictions for illegal deforestation in the Amazon result in compensation payments. Furthermore, the processes have not guaranteed that the fines collected are used for the restoration of the biome.
Upon reviewing 3,551 public interest civil actions (ACPs) filed by Federal Prosecution Service (MPF) between 2017 and 2020 due to illegal deforestation in the Amazon, Imazon found that the number of convictions has increased, but effectively punishing environmental crimes remains challenging.
According to the research, out of 640 judgments upheld after appeals and 55 consent decrees (TACs) established, which determined compensation of R$252 million, only 37, or 5%, had their compensation paid.
Imazon reported that the debts paid amount to R$652,300, covering three judgments and 34 agreements. Considering cases in the payment phase, with bank account freezes of the defendants or installment payments, the percentage increases to only 8%.
The study further indicates a tendency among judges to reduce the amounts requested by the Federal Prosecution Service. In cases where initial and final values were available, there was a 34% reduction in compensations for material damages—averaging from R$11,304 to R$7,515 per hectare deforested—and a 59% reduction for collective moral damages—from R$5,616 to R$2,280 per hectare deforested.
“Making criminals pay for illegal deforestation in the Amazon and repairing the damage is one of the main challenges for environmental justice,” Imazon lamented in a statement.
On the other hand, the institute considers it a positive finding that convictions have increased since 2017, following the launch of the Amazon Protect Program, a project by the MPF to combat illegal deforestation in the region. Nevertheless, the data still show that convictions are a minority among all such cases.
By December 2023, out of 3,500 actions, approximately 2,000, or 57% of the total, had received a judgment, with 695 cases resulting in some form of accountability. These included 640 cases judged to be procedurally valid and 55 consent decrees, which are commitments by those responsible for illegal deforestation to undertake remedial actions.
This analysis indicated an increase in accountability, as another Imazon survey found that, of the 3,500 cases analyzed, only 650 (18%) had judgments by October 2020, with 51 being procedurally valid.
“That is, the convictions accounted for 1% of total actions and 8% of the judgments. Most decisions holding deforesters accountable [449 cases] occurred after October 2020, especially in 2023, when there were 241 valid judgments,” the Imazon report explained, emphasizing that both the Federal Regional Court of the 1st Region (TRF1) and the Superior Court of Justice (STJ) have been more favorable to the accountability requests of the MPF.
“It is positive to see the increase in procedurally valid cases for holding deforesters accountable and that the courts have upheld a favorable understanding of convictions in these cases that use evidence obtained remotely, such as satellite images and database use. The challenge now is to achieve effective payment of compensations and the recovery of deforested areas,” said Imazon researcher Brenda Brito.
However, the study also shows that 66% of the judgments were unfavorable to the preservation of the biome even after appeals. By December 2023, 860, or 42% of the cases, had been dismissed—indicating the courts determined there was no evidence for action. Additionally, 268 actions, or 13%, were deemed unfounded—meaning all MPF requests were denied. Furthermore, 137 (7% of the total) were declined by the state judiciary. Another 68 actions, representing 3% of the total, were annulled, meaning they became invalidated decisions awaiting new judgments.
According to Imazon, the predominance of case dismissals occurred mainly until 2020 and was due to actions with uncertain defendants. In these cases, the MPF filed actions due to illegal deforestation even when the defendant could not be identified, enabling the courts to enjoin the area from any economic use, which can combat land grabbing. However, in October 2020, the STJ adopted a favorable stance on continuing actions against uncertain defendants, leading to an increase in procedurally valid cases of this type after appeal judgments.
Proceeds will be used for debt refinancing, sustainability projects, and general corporate purposes
01/30/2025
ESG company Ambipar raised $400 million through a debt issuance in international markets, with demand for its green-labeled bonds exceeding twice the issued volume, reaching $850 million. The waste management company priced the eight-year bonds at 10.87%, slightly below the initial guidance of 11%, according to sources familiar with the transaction.
This is Ambipar’s second bond issuance in international markets. In January 2024, the company raised $750 million, surpassing its initial $500 million target amid strong investor demand. That issuance had a seven-year maturity and was priced at 9.87%, below the initial guidance of 10%.
Ambipar drew less demand compared to other Brazilian companies that recently entered the market. Usiminas and JBS, both frequent issuers, saw investor interest surpass their bond offerings by more than four times.
An investment banker, speaking on condition of anonymity, said Ambipar’s issuance faced challenges compared to other January offerings, attributing this to the company’s credit profile and lower market recognition rather than a shift in investor appetite.
Another person familiar with the matter noted that Ambipar operates in a niche sector with no direct international peers, making it harder for investors to assess its credit profile. However, the company still managed to extend the bond maturity and attract large investors focused on sustainable assets.
Market strategy
Ambipar initially marketed the bonds with a target issuance between $400 million and $500 million (a benchmark-sized offering). The company plans to use the proceeds to repay debt maturing in 2031, refinance other obligations, and fund general corporate purposes. An equivalent amount will also be allocated to sustainability projects.
In a statement, Chief Financial Officer João Arruda said the bond issuance would help Ambipar roll over short-term debt.
“We are very pleased with the outcome of the transaction. The issuance attracted high-quality investors who believe in Ambipar’s future and support our environmental agenda,” he said.
“The bond market offers an eight-year maturity, which is not available in the local market. As a prudent measure, we will use this issuance to refinance Ambipar’s debt due between 2025 and 2028, as well as part of the green notes maturing in 2031. This gives us a solid timeframe to execute our growth, profitability, and efficiency plans, increasing our cash generation and improving our credit profile over time,” Mr. Arruda added.
Fitch Ratings assigned the issuance a BB- rating, citing Ambipar’s strong position in the environmental services sector, growth potential, and geographically diversified revenue streams. However, analysts noted that the company’s high leverage and significant cash flow consumption for interest payments constrained its rating.
Ambipar joins JBS, Bradesco, and Usiminas, which also raised funds in the international bond market in January. JBS issued $1.75 billion, Bradesco secured $750 million, and Usiminas raised $500 million.
Investment banks had anticipated a stronger bond issuance season, but rising volatility in both domestic and international markets led some companies to postpone fundraising plans. The current issuance window is expected to remain open until the second week of February, when companies begin releasing fourth-quarter 2024 earnings results.
Ambipar’s issuance was jointly led by Bank of America, Bradesco BBI, and UBS BB, with settlement scheduled for February 5.
Company holds 70% of the business, valued between R$1bn and R$1.2bn; asset attracts major players in the electric sector
01/30/2025
Neoenergia is in advanced talks to sell its 70% stake in the Baixo Iguaçu Hydroelectric Plant in Paraná, Valor learned from four market sources. The asset’s valuation ranges between R$1 billion and R$1.2 billion. Copel holds the remaining 30% of the plant and does not plan to exit the company.
Potential buyers include French EDF, Brazilian Casa dos Ventos, Chinese Spic, and Czech EnergoPro, according to sources familiar with the matter.
If the sale is completed, the new owner will take over a project capable of supplying electricity to about one million people. The asset’s concession expires in 2049. Located in the final stretch of the Iguaçu River, between the municipalities of Capanema and Capitão Leônidas Marques in southwestern Paraná, the plant began operations in 2019 after receiving an investment of R$2.3 billion.
Sources indicate that the asset’s divestment process is in its final stages, narrowing down between EDF and EnergoPro. The sale of the plant is part of Neoenergia’s strategy of asset rotation to optimize and enhance its portfolio—conducting swaps and divestments for this purpose.
At the end of 2022, Neoenergia announced an asset swap with Eletrobras, valued at R$787.8 million, without cash transfer. In 2023, it completed the sale of 50% of a transmission platform to Warrington Investment.
Another reason is the company, controlled by the Spanish group Iberdrola, is also striving to reduce its leverage, with a net debt-to-Ebitda ratio at 3.43 times, according to third-quarter 2024 data. The previous year’s same period showed a ratio of 3.11 times, according to Valor Data. Currently, the net debt stands at R$50.6 billion.
The plant was auctioned to Neoenergia, with which Copel began negotiations in 2011. The project operates on a run-of-the-river model, using the natural river flow for power generation without requiring large reservoirs. This technology reduces environmental impacts by preserving the river’s natural dynamics and minimizing flooding, although it makes the plant more susceptible to water level fluctuations, potentially affecting output during droughts.
EDF is aiming to expand its presence in Brazil, already operating in transmission and wind, solar, hydro, and thermal power generation. In April 2024, the company participated in the contest for control of Empresa Metropolitana de Águas e Energia (Emae) but was outbid by the Phoenix Fund, owned by investor Nelson Tanure, who won with an offer of R$1.04 billion. Recently, EDF also acquired a solar energy park from Volga Energia.
EDF is France’s largest energy producer and returned to French state control in 2023 after nearly 18 years in the stock market. Its shares were delisted from the Paris Stock Exchange, and the nationalization cost the French government €9.7 billion.
The Czech company Energo-Pro is expanding its presence in the Brazilian market and seeking new opportunities in the hydroelectric sector. At the end of November 2024, the company acquired seven small hydroelectric plants (PCHs) from the Canadian manager Brookfield, totaling 90 MW of installed capacity. This move signals the company’s interest in strengthening its presence in the country, expanding its renewable generation portfolio.
Since acquiring Pacific Hydro, Spic has significantly expanded its presence in Brazil’s electric sector. The company controls the Millennium and Vale dos Ventos wind farms in Paraíba and acquired the São Simão Hydroelectric Plant for R$7.18 billion in 2017. In 2020, it expanded its investments in the thermal segment by acquiring stakes in GNA I and GNA II projects, while integrating future GNA III and GNA IV projects. The Chinese government-controlled company also reinforced its renewable generation presence by taking control of Canadian solar plants and announced the construction of a new wind farm in Rio Grande do Norte.
Casa dos Ventos, a wind energy producer owned by the Araripe family with French group TotalEnergies as a minority investor, also seeks to diversify its portfolio. Within its growth plan for renewable energy supply, the company is also targeting solar sources.
Neoenergia, Casa dos Ventos, and EDF did not comment when approached. Spic declined to comment on mergers and acquisitions. EnergoPro did not return requests for comment.
Environmental hurdles have been the main challenge for implementing new hydroelectric potentials, especially in the Amazon region. This scenario helps explain the growing interest from both national and international investors in acquiring operational assets.
Portuguese EDP resumed the sale process of the Santo Antônio do Jari (392.95 megawatts) and Cachoeira Caldeirão (219 MW) hydroelectric plants in Amapá. Âmbar Energia, a company controlled by holding J&F, purchased four Cemig hydroelectric plants in a late 2024 auction for R$52 million.
In January, Gerdau announced the purchase of two Small Hydroelectric Plants (PCHs), Garganta de Jararaca and Paranatinga II, in Mato Grosso, for R$440 million.
Over the past decade, with substantial changes in the energy mix, considering the significant increase in the share of sources that do not generate energy continuously, such as wind and solar photovoltaic, hydropower’s role has become crucial.
Marisete Pereira, president of Abrage, an association representing hydroelectric generation companies, explains that hydroelectric plants play an essential role in the reliability of Brazil’s electrical system, providing services such as power, flexibility, and other services, along with a centennial lifespan.
The electric sector estimates that 11 GW of power could still be added to the system through modernization and repowering of plants. This is equivalent to the capacity of the Belo Monte plant.
With the Capacity Reserve Auction (energy security) expected to occur in mid-2025, the expectation is that contracted plants will act as capacity reserves, adjusting generation according to demand and filling gaps left by intermittent sources.
*By Mônica Scaramuzzo e Robson Rodrigues — São Paulo
Administrative rule likely to update corporate revenue thresholds
01/30/2025
Brazil’s Ministry of Finance and Ministry of Justice and Public Security are expected to update soon the revenue thresholds that require companies to notify the antitrust watchdog named Administrative Council for Economic Defense (CADE) of mergers and acquisitions. Under Brazil’s antitrust legislation, companies are currently required to report deals if the parties involved posted revenues of at least R$750 million (one of the parties) and R$75 million (the other party) in the previous year. According to people familiar with the discussions, these thresholds will likely increase to R$1 billion and R$200 million—or maybe more.
According to sources, the update would be implemented through an administrative rule by both ministries and is primarily aimed at easing the workload of CADE’s General Superintendence—the division overseeing the initial review of mergers and acquisitions. That would allow more personnel to focus on regulating and overseeing big tech companies from a competition perspective, as part of a government proposal currently being drafted by the ministries to be sent to Congress soon.
According to government sources, this update could reduce the number of mergers requiring notification to the antitrust watchdog by about one-third, lowering the caseload.
The antitrust legislation (Law No. 12,529), enacted in 2011, originally set the revenue thresholds for mandatory notification at R$400 million for one party and R$30 million for the other. In 2012, the ministries of Finance and Justice raised these figures to the current R$750 million and R$75 million, respectively. Since then, no further adjustments have been made, despite inflation during the period.
Experts argue that the outdated figures have led to record-high caseloads at CADE, straining its lean staff. Additionally, companies have long called for an adjustment in the required threshold, as exemption from mandatory notifications would reduce legal costs.
In 2024, CADE data showed that 712 deals were reported, nearly 20% more than the previous year. In recent years, the antitrust regulator has sought ways to expedite reviews, including through artificial intelligence. The average processing time for standard cases dropped from 117 days in 2023 to 93.9 days last year.
A 2023 study by the Antitrust Research Group and the Center for Economic Freedom at Mackenzie Presbyterian University found that, based on the General Market Price Index (IGP-M), the revenue thresholds should be raised to R$1.7 billion and R$170 million.
According to Vicente Bagnoli, an antitrust law professor at Mackenzie and one of the study’s authors, the research concluded that most merger cases submitted to the regulator appear unnecessary. He noted that many deals are reported only due to outdated revenue thresholds rather than for posing a real risk of market concentration.
“Outdated thresholds contradict the spirit of the law,” Mr. Bagnoli said. He argued that adjusting the figures would allow the antitrust regulator to “optimize its resources, dedicating more time and personnel to expediting investigations into anticompetitive practices, such as cartelization and abuse of dominant position.”
Paola Pugliese, a partner at Lefosse Advogados and chair of the Competition Commission at the International Chamber of Commerce (ICC), said the update is widely welcomed by the market. “Because the current criteria have been in place since 2012 with no inflation adjustment, they now capture many more cases than when first established,” she noted.
Within CADE, opinions on the matter are divided. In early 2024, CADE President Alexandre Cordeiro suggested in an interview with Valor that other notification criteria should be modified instead of simply increasing the revenue thresholds.
“The push to update these figures seems driven by a desire to avoid notifications. Shouldn’t the goal be the opposite? Analyzing more cases would build a more comprehensive database and provide deeper insights into market dynamics. Is the antitrust regulator willing to forgo access to more data?” Mr. Cordeiro questioned at the time. “A key discussion point is whether we need to refine the criteria—perhaps using deal value alongside revenue thresholds.”
Some experts opposing the update warn that it could enable large corporations to acquire regional companies and expand their market power without the antitrust watchdog’s scrutiny.
“It’s questionable whether the update would weaken enforcement,” Ms. Pugliese countered. “Statistically, the vast majority of cases have low competitive significance.” She added that deals with a real impact on competition are unlikely to go unnoticed by CADE, which retains the legal authority to require notification even when a deal falls below the established thresholds.
Eric Hadmann Jasper, a partner at HD Advogados and an expert in antitrust legislation, echoed this view. “Updating the revenue thresholds makes a lot of sense,” he said. “It would be a simple way to free up internal resources for investigating unilateral conduct, particularly in digital markets, which are complex.”
Mr. Jasper emphasized that the antitrust regulator would still have mechanisms to detect problematic mergers, as competitors can file complaints with the agency. “It just requires vigilance, monitoring, and educational campaigns,” he noted.
CADE, the Ministry of Finance, and the Ministry of Justice and Public Security did not respond to requests for comment.
State Climate Change Yearbook reveals emission levels per million reais produced in each Brazilian state
01/29/2025
The more diversified the economy of Brazilian states and the more it leans towards services and industries, the more stable and lower the carbon intensity of the state’s Gross Domestic Product (GDP) becomes over the years. This is the key finding of the first State Climate Change Yearbook.
Developed by the Centro Brasil no Clima (CBC) and the Instituto Clima e Sociedade (iCS), with support from Itaúsa, the study compiles data on emissions, climate risks, and mitigation and adaptation policies and actions across various sectors of the economy in Brazil’s 27 federative units. From 2025 onwards, the publication will be updated annually.
In 2022, the six federative entities emitting the most carbon per million reais generated had economies based on agriculture and cattle management: Acre, Rondônia, Mato Grosso, Pará, Maranhão, and Tocantins. Not surprisingly, these are located in the Legal Amazon, where the highest emissions stem from deforestation and agriculture. Amazonas, also part of this geopolitical zone, ranked ninth in 2022. The exceptions are Roraima and Amapá, which appear at the bottom of the ranking.
These states aren’t necessarily the country’s main emitters, as the carbon intensity of GDP considers the ratio between each federative entity’s net annual carbon dioxide emissions (tCO2e) and its respective GDP.
This is the case for Acre, which, despite having a median level of emissions compared to others, leads the ranking due to its small GDP. Meanwhile, São Paulo and Rio de Janeiro, with high and intermediate emissions respectively, ranked among the lowest carbon intensity rates of GDP in 2022 (24th and 23rd positions), due to their large GDPs.
“When we analyze different states, we see that their economic matrix lead to vastly different carbon intensities and distinct land-use change requirements,” said Walter De Simoni, climate policy, institutions, and law manager at the iCS.
The emissions landscape across Brazilian states helps explain the country’s overall pattern—placing Brazil among the world’s top ten greenhouse gas (GHG) emitters. The majority of the country’s emissions (about 75%) stem from land-use changes and agriculture.
Guilherme Syrkis, executive director of CBC, adds that Brazil’s diverse regions have varying sources of emissions. “Poorer states tend to have higher emissions from deforestation and agriculture, whereas wealthier states see greater emissions from transportation, industry, and energy production,” he noted.
According to Fernanda Westin, a senior researcher and consultant at CBC, deforestation fluctuations from year to year significantly impact the carbon intensity of GDP in states heavily reliant on land use. Roraima exemplifies this trend, dropping from sixth place in 2021 to second-to-last in 2022.
Ms. Westin also pointed out that negative emissions can be achieved through carbon offsetting, “Carbon removals occur when forests are planted, and high-yield agriculture and pastures absorb CO₂ as vegetation grows,” she said.
The annual report further indicates that there is no direct correlation between a state’s net carbon emissions and the size of its GDP. For example, Mato Grosso leads the nation in emissions but ranks only 11th in GDP, according to the 2022 data presented in the report.
William Wills, CBC’s project director, emphasizes that the report is not meant to compare states—each with unique characteristics, histories, and future projections—but rather to highlight public policies being implemented so that civil society can monitor and advocate for change. “This helps push for a leveling-up process so that all states build the capacity to tackle climate change,” he says.
The goal, Mr. Syrkis adds, is to institutionalize best practices and demonstrate that states attracting the most green investments have structured climate and environmental policies. Seven Brazilian states currently have dedicated climate funds in operation or development: Espírito Santo, Mato Grosso do Sul, Amazonas, Rondônia, Santa Catarina, São Paulo, and Tocantins.
“Espírito Santo and Mato Grosso do Sul have stood out with promising policies and are becoming favorites of institutions like the Inter-American Development Bank (IDB), the World Bank, the European Bank, and Brazil’s BNDES. These banks follow a checklist, reviewing the entire multi-year planning process, including climate policies,” said Mr. Syrkis.
Brazil establishes humanitarian assistance post for deported citizens, seeks working group with Washington
01/29/2025
The Brazilian government has decided to set up a humanitarian assistance post for Brazilians deported from the United States. Additionally, it plans to propose the formation of a working group with the U.S. government to address issues related to deportations.
These were the two main solutions presented to President Luiz Inácio Lula da Silva during a meeting held on Tuesday (28) at the Planalto Palace. The meeting was convened following reports of mistreatment of Brazilians during a problematic flight that made an unscheduled landing in Manaus last Friday (24).
Brazil’s strategy is not to confront the U.S. government or challenge the mass deportation policy implemented by President Donald Trump. According to Foreign Minister Mauro Vieira, the goal is to ensure that Brazilians are brought back to the country safely, with respect for human rights and in accordance with bilateral agreements on the matter.
The chosen method to engage with the Americans is diplomacy, conducted directly from Brasília. The Brazilian embassy in Washington, still attempting to establish initial contacts with senior U.S. officials, will be sidelined to avoid friction with the Trump administration.
As such, Foreign Minister Mauro Vieira and his team will lead the proposal with the Americans to create a working group. The minister met on Monday (27) with Gabriel Escobar, the commercial representative of the U.S. embassy in Brasília, for a preliminary discussion on the matter. The U.S. diplomatic representation, without providing details, described the meeting as a “technical meeting.”
In a press conference, referring to previous agreements with the Americans, Mr. Vieira reiterated, “On national soil, there cannot and should not be handcuffed individuals, and we will work to ensure that does not happen.”
He also stated that “there was no consideration, nor will there be, of using Brazilian Air Force (FAB) planes” to transport deportees from U.S. soil. The understanding at the Foreign Affairs Ministry is that this responsibility lies with the U.S. government, which decided to carry out mass deportations. However, the foreign minister emphasized that this should be done “in respect of the regulations.”
“We will talk with U.S. authorities to ensure that deportations are carried out in accordance with American and Brazilian laws,” said the Foreign Minister.
Regarding Operation Welcome, Human Rights Minister Macaé Evaristo reiterated during the same press conference that one of the government’s main strategies is to “ensure that families are not separated and that they travel under favorable conditions.”
The government does not yet know the costs or the necessary structure to implement this operation. However, according to Macaé, the post should include representatives from ministries such as Health, Labor, and Human Rights.
The inspiration is to replicate, on a smaller scale, Operation Welcome, established in Roraima to receive waves of Venezuelans continuing to arrive in Brazil through the border town of Pacaraima. Ms. Macaé stated that the government intends to work with businesses to secure employment for deportees. According to her, there has already been “interest expressed by companies willing to promote this.”
During the press conference, Mauro Vieira also seized the opportunity to criticize the U.S. deportation operation. In his view, the transportation of Brazilians was “tragic” and could have resulted in an aviation accident. Finally, the Foreign minister confirmed that President Lula is expected to participate virtually in the upcoming meeting of the Community of Latin American and Caribbean States (Celac), which will specifically address the crisis involving the deportation of illegal immigrants. The meeting is scheduled for Thursday afternoon (30).
Long dollar positions against the Brazilian currency in the derivatives market drop to $58.3 billion from $77.6 billion
01/29/2025
Foreign investors have reduced their bets on a stronger dollar against the Brazilian real by $19.3 billion in the derivatives market since the peak of these positions, reached in the first days of the Central Bank’s intervention in the spot market on December 16, 2024.
Several factors have contributed to this sharp reduction over the past 40 days. In addition to the monetary authority’s intervention, currency fund managers cited a more measured stance from U.S. President Donald Trump on trade tariffs, expectations of a higher Selic benchmark rate, and the lack of new fiscal developments in Brazil.
Between December 16 and the latest data released by B3 stock exchange on Monday (27), net long dollar positions fell from $77.6 billion to $58.3 billion, according to figures covering mini-dollar contracts, dollar futures, swaps, and foreign exchange coupon contracts (DDI).
A long position in the dollar reflects both current market movements and future expectations. The unwinding of futures market positions helps explain the recent depreciation of the dollar, as the Brazilian futures market has greater liquidity than the spot market. It also signals that fewer investors are willing to hold dollars for future exchange, possibly anticipating a further decline in the U.S. currency against the real or seeing limited upside potential for the dollar. Over the period of this position reduction, the exchange rate per U.S. dollar in the spot market fell from R$6.09 to R$5.91, marking a 3% depreciation of the U.S. currency against the real.
Dollar sell-off
For Ronny Kim Woo, a multi-asset manager at ARX Investimentos, the unwinding of dollar positions is closely linked to international developments.
“It’s important to look back at the last quarter of last year. In October, as betting markets increased the odds of a Trump victory, investors began positioning for a Trump trade—buying the dollar against all currencies, not just in developed markets but especially in emerging markets,” he explained.
In October, as Mr. Trump’s chances of winning the White House grew—along with expectations of a Republican majority in both houses of Congress—the exchange rate per dollar appreciated 6.14%, climbing from around R$5.44 to R$5.78. Over the same period, the DXY index, which tracks the dollar against a basket of major currencies, gained 3.1%.
“The market started pricing in the election outcome ahead of time. Around the same time, expectations for Federal Reserve rate cuts also began to shift,” Mr. Woo noted.
Domestically, a weak fiscal package announcement in late November, coupled with the government’s proposal to exempt income tax on salaries up to R$5,000, led foreign investors to increase their dollar positions against the real.
Until mid-November, after Mr. Trump’s election victory, the real had been one of the best-performing currencies against the dollar. Market participants had anticipated that the government’s fiscal package might support the Brazilian currency, prompting investors to avoid shorting the real. Additionally, there was an expectation that Mr. Trump’s policies would only indirectly affect Brazil. However, this view shifted after details of the fiscal measures emerged, leading to a sharp deterioration in the real’s performance, according to Mr. Woo of ARX.
Turning point
By mid-December, as long dollar positions began to unwind, Brazil’s Central Bank tightened monetary policy, signaling two additional 100 basis-point hikes in the Selic rate in upcoming meetings—a highly conservative stance. Around the same time, the Central Bank began intervening directly in the spot market.
“With this intervention [which drove the dollar lower], foreign investors saw an opportunity to lock in profits from the positions they had built since October,” Mr. Woo.
Hedging strategies also played a role. Investors with long dollar futures positions incur the Selic rate while earning the foreign exchange coupon rate. In December, two factors made these positions less appealing: the Central Bank raised the Selic rate and signaled further hikes, while its interventions in the spot and swap markets pushed down the foreign exchange coupon rate.
As a result, holding long dollar positions became more expensive. While these factors alone may not fully explain the unwinding of positions, traders say that, combined with profit-taking and a calmer global outlook, they became a reason for caution.
“Betting structurally against the real right now is risky and could be very costly. The widening interest rate differential [between Brazil and the U.S.] undermines this strategy over the long run,” said Rodrigo Cabraitz, a currency trader at Principal Claritas.
He expects that future bets against the real will be more tactical, with shorter stop-loss levels to limit downside risk.
“To take a long-term bearish stance against the real, we would need more negative domestic news. So far, we’ve had a quiet month with no major developments impacting the market,” he added.
Mr. Cabraitz also noted that the first quarter typically sees a seasonal inflow of dollars into Brazil due to grain exports, which could provide additional support for the real.
“This marginally positive inflow scenario, combined with the interest rate differential, discourages long dollar positions. Unless new negative news emerges, the fundamentals of the real make it harder to bet against the Brazilian currency,” he explained.
Another factor driving the shift in dollar positions is the preference for relative trades among emerging market currencies.
“If we look at the most liquid currencies in the region—the Brazilian real, Mexican peso, Chilean peso, and Colombian peso—the real stands out, ” Mr. Cabraitz said.
“With low volatility due to a lack of fresh local developments and external factors weighing more heavily on peer markets”, the real is positioned to outperform other Latin American currencies, he added.
