Brazil wants to include cars and sugar in Mercosur

The Lula administration aims to give strategic sectors preferential treatment during its presidency of the bloc

06/27/2025 

Brazil plans to use its upcoming six-month presidency of Mercosur to push for the inclusion of the automotive and sugar industries in the bloc’s common trade regime, according to the country’s Foreign Ministry, known as Itamaraty. The initiative is expected to be one of President Lula’s top priorities for the regional group in 2025.

The effort is tied to the economic significance of these sectors within intra-bloc trade. Roughly half of all trade between Brazil and Argentina, for example, is concentrated in the auto industry. Yet despite its central role, the sector has remained outside Mercosur’s common trade framework since the bloc was created 34 years ago.

“Our goal is to include the automotive sector in Mercosur, and we will continue working toward a regional agreement in this area,” said Ambassador Gisela Maria Figueiredo Padovan, secretary for Latin America and the Caribbean at Brazil’s Ministry of Foreign Affairs, who is leading the negotiations.

Ms. Padovan said the Brazilian government has already drafted a proposal outlining a new common industrial policy for the regional auto sector. “We’ve submitted a draft agreement aimed at establishing a shared industrial policy. Just between Brazil and Argentina, autos account for 50% of bilateral trade—that’s highly significant. We’re pursuing a deal that will be mutually beneficial,” she said.

Negotiations on the sugar industry are still at an earlier stage, with no formal text under discussion. Even so, talks are moving forward, according to Ambassador Francisco Pessanha Cannabrava, director of the Mercosur Department at Brazil’s foreign ministry.

“In the case of sugar, we’re aware of the sensitivities among our Mercosur partners, but our goal is not to harm local agriculture. Our focus is on aligning production chains. Countries like Uruguay and Paraguay have domestic industries that rely on sugar, so we need to find ways to integrate it into the bloc,” Mr. Cannabrava said.

As part of this process, Brazil is considering working with the Inter-American Development Bank (IDB) to help develop technical benchmarks for sugar sector integration. “We’re working on terms of reference to figure out how sugar can be included in Mercosur in a way that’s a win-win for everyone. These terms could be developed by respected institutions like the IDB,” he added.

Brazil’s Foreign Ministry also expressed optimism about reaching an agreement with Argentina on a new version of the Common External Tariff Exception List. The current discussion stems from a proposal made during Argentina’s previous Mercosur presidency, which secured exemptions for 50 new products.

According to Brazilian officials, a final agreement could be reached during the next Mercosur summit, scheduled for July 2–3 in Buenos Aires. The exception list allows member countries to apply different external tariffs to specific goods, giving them more flexibility within the bloc’s broader trade structure.

*By Renan Truffi  and Sofia Aguiar  — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Supreme Court expands big tech liability for user content

In historic ruling, companies may now face damages if they fail to remove criminal posts

 

 

06/29/2025

The Supreme Federal Court (STF) ruled on Thursday (26), by 8 votes to 3, to expand the legal liability of social media platforms for content posted by users. Companies will be required to act proactively to remove posts containing “serious crimes” and could face civil penalties if they fail to do so.

The court declared partially unconstitutional Article 19 of the Internet Civil Framework, which stated that tech companies could only be held civilly liable if they disobeyed a court order to remove content. Going forward, this rule will apply only to crimes against honor, such as libel, slander, and defamation.

Voting in favor of expanding platform liability were Justices Dias Toffoli and Luiz Fux, who served as the case rapporteurs, along with Luís Roberto Barroso, Flávio Dino, Cristiano Zanin, Gilmar Mendes, Alexandre de Moraes, and Cármen Lúcia. Dissenting were Justices André Mendonça, Edson Fachin, and Nunes Marques, the last to cast his vote.

Instead of Article 19, Article 21 of the Internet Civil Framework now applies to criminal content. This provision requires platforms to remove posts after being notified. If they fail to do so and a court deems the content criminal, the platform may be held liable. Originally, Article 21 applied only to non-consensual nudity; the STF has now expanded it to cover any type of crime or unlawful act.

The court also ruled that platforms may be held liable, even without notification or a court order, if they host or promote paid ads featuring unlawful content or maintain fake bot accounts.

Additionally, the STF established that platforms must fulfill a “duty of care” concerning “serious crimes.” If they fail to remove such posts on their own, they may be subject to civil penalties—even without prior notice or a judicial ruling.

Listed as “serious crimes” are: anti-democratic acts; terrorism or preparatory acts; incitement, assistance, or encouragement of suicide or self-harm; incitement to discrimination based on race, color, ethnicity, religion, national origin, sexuality, or gender identity; crimes against women; sexual offenses against vulnerable individuals; child pornography; crimes against children and adolescents; and human trafficking.

According to the ruling, platforms will not be penalized for isolated serious crimes unless notified and they fail to act. Civil liability will apply when there is a high volume of such content and the platform takes no action. In practice, the decision forces companies to adopt active monitoring practices to curb criminal behavior on their networks.

Justices also required platforms to adopt self-regulation policies that include “notification systems, due process mechanisms, and annual transparency reports on extrajudicial takedown requests, ads, and content promotion.” Companies must also provide dedicated user-support channels.

The court determined that companies operating in Brazil must establish and maintain a local headquarters and legal representative. Marketplaces will be held liable under the Consumer Protection Code. Messaging services such as WhatsApp remain subject to Article 19, but only in relation to interpersonal communications.

Fake profile case triggered ruling

The STF analyzed two cases. Justice Dias Toffoli was the rapporteur in a case examining the constitutionality of Article 19, which involved a fake Facebook profile. Justice Luiz Fux reported on a case concerning platform liability for third-party content; it involved a ruling ordering Google to remove a community from the now-defunct Orkut.

Mr. Toffoli, the first to vote, proposed applying Article 21 instead of Article 19 in December of last year. Mr. Fux supported holding platforms liable when they have “clear knowledge of unlawful acts” and fail to act. He cited hate speech, racism, pedophilia, incitement to violence, advocacy of the violent overthrow of the democratic state, and support for coups as examples.

Chief Justice Luís Roberto Barroso proposed that Article 19 be retained only for honor-related offenses. For all other crimes, he argued Article 21 should apply. His position prevailed.

The dissenters—Justices André Mendonça, Edson Fachin, and Nunes Marques—argued that Article 19 should be fully preserved.

Tech firms raise concerns

In a statement, Attorney General Jorge Messias called the ruling “historic.” “It is a civilizational milestone and aligns with measures adopted by other democratic countries aimed at better protecting society from crimes, fraud, and hate speech that threaten citizens and democracy in the digital environment,” he said.

Google, a party in the case reported by Mr. Fux, said it is still reviewing the decision. “Google has expressed concerns about changes that may impact free speech and the digital economy. We are evaluating the approved ruling, especially the expansion of takedown obligations under Article 21, and their impact on our products. We remain open to dialogue.”

Meta, parent company of Facebook and Instagram and a party in the case under Mr. Toffoli, expressed concern in a statement. “Weakening Article 19 of the Internet Civil Framework introduces legal uncertainty and will have consequences for free expression, innovation, and digital economic growth, significantly increasing the risk of doing business in Brazil.”

*By Tiago Angelo and Isadora Peron, Valor — Brasília
Source: Valor International
https://valorinternational.globo.com/
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Political rift in Brasília stalls income reform plan

Bill’s rapporteur Arthur Lira delays report on income tax exemption for low earners as lawmakers push back on government’s compensation plan

 

 

 

06/29/2025

The growing rift between Brazil’s executive and legislative branches following the repeal of a presidential decree to raise the Financial Transactions Tax (IOF) is now threatening other government priorities in Congress. One casualty is the income tax reform bill that would raise the exemption threshold to R$5,000 per month. The bill’s rapporteur, Congressman Arthur Lira (Progressive Party, PP), is expected to postpone the release of his report, which had been scheduled for this Friday (June 27).

At the same time, lawmakers anticipate pushback against the provisional presidential decree (MP) introduced to offset lost revenue from the scrapped IOF hike.

Regarding the income tax proposal, legislators now believe the timing is not right and that tensions need to subside. However, the goal is still to present the report before the legislative recess, which begins on July 18.

Relations between the government and Congress have soured, with lawmakers increasingly voicing frustration over revenue-raising measures and new taxes. There is a growing narrative within the legislature of “fatigue” with policies perceived as tax-heavy.

Mr. Lira has been searching for ways to offset the fiscal loss from expanding the tax exemption. The Finance Ministry’s original proposal includes taxing dividends and high-income earners to compensate for the new exemption ceiling. Mr. Lira’s focus in the upcoming report will be on evaluating and negotiating this compensation.

Searching for support

The executive branch is also pushing for an alternative MP to replace the IOF hike. Despite the friction, the government believes it is still possible to reach a consensus in Congress. As Valor reported on Wednesday, the economic team has already been warned that there are not enough votes to pass the proposal in its current form.

The MP includes, among other provisions, an increase in withholding tax on Interest on Net Equity payments distributed by companies to shareholders and changes to tax-incentivized private securities.

Talks are unfolding during a low point in the relationship between the government and Congress. Following the IOF repeal, officials in the presidential palace believe that Lower House Speaker Hugo Motta (Republicans Party) broke a promise to ensure predictability in the legislative agenda. They say that commitment was a key reason behind the government’s support for Mr. Motta’s appointment to the leadership of the Lower House. Sources admit that the relationship with Mr. Motta has deteriorated, but caution that the government must act “calmly.”

According to President Lula da Silva’s aides, Mr. Motta’s move was politically calculated—an attempt to secure a base of support in Congress similar to what Mr. Lira had built. They believe Mr. Motta is also laying the groundwork for a broader political strategy in the run-up to the 2026 elections, amid Mr. Lula’s declining approval ratings. Mr. Motta did not respond to requests for comment.

Speaker Motta’s allies argue there was no “surprise” in putting the IOF repeal to a vote, as it reflected the majority sentiment in the chamber. They said this position was made clear in a meeting with Institutional Relations Minister Gleisi Hoffmann.

Following the defeat, Mr. Lula addressed the public on social media, saying, “A lot of people have been talking about taxes in Brazil in recent days,” and that it’s “important to understand what’s actually being proposed.” He added, “The government wants to make changes that target privileges and injustices. To make the system fairer.”

*By Beatriz Roscoe, Murillo Camarotto, Sofia Aguiar  and Renan Truffi, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Debenture offerings surpass R$2.2bn after holiday break

At least four companies to conclude deals this week; others expected in May

04/23/2025 

Neonergia Pernambuco, Mineração Morro do Ipê, Cirklo, and Autogeração Solar are finalizing issuances this week
Neonergia Pernambuco, Mineração Morro do Ipê, Cirklo, and Autogeração Solar are finalizing issuances this week — Photo: Marcello Casal Jr/Agência Brasil/Arquivo
 

Following the extended holiday weekend, at least four companies are set to conclude debenture offerings totaling R$2.27 billion. Neonergia Pernambuco, Mineração Morro do Ipê, Cirklo, and Autogeração Solar are all finalizing their issuances this week.

Two additional companies—Cielo and Votorantim Cimentos—have ongoing offerings but are expected to wrap them up in May. Cielo is aiming to raise R$3 billion, while Votorantim Cimentos plans to issue R$1 billion.

Among the deals set to close this week, the largest comes from Mineração Morro do Ipê. The mining company, controlled by Mubadala and Trafigura, manages operations in the Serra Azul region, which includes the municipalities of Brumadinho, São Joaquim de Bicas, and Igarapé in Minas Gerais.

The company is seeking R$1.02 billion through seven-year debentures. Part of the issuance will offer returns of CDI (Interbank Deposit Certificate) plus 3.27%, while the remainder will pay CDI plus 2.45%. Settlement is scheduled for April 25.

Neonergia Pernambuco plans to issue R$700 million in tax-exempt debentures, which offer income tax exemption for individual investors. These seven-year bonds will also be settled on April 25, although the final yield has not yet been defined.

On April 24, special-purpose company Autogeração Solar is set to complete a R$330 million offering of 18-year tax-exempt bonds. The proceeds will be used to build a photovoltaic plant.

Cirklo, a company focused on plastic recycling, will launch its first debenture offering in the market, raising R$220 million. The notes are labeled as green bonds. Proceeds will go toward debt refinancing and strengthening the company’s cash position, with a commitment to allocate the same amount to green projects. Settlement is expected on April 22.

*By Rita Azevedo, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Interest groups want to slice up reform of civil code

Bill 4/2025 aims to revise over 1,200 provisions on family, inheritance, damages and contracts

06/23/2025

Filed early this year in Brazil’s National Congress, the proposal to overhaul the Civil Code hasn’t even begun its formal review yet and is already provoking backlash. Dozens of organizations, spanning legal associations to industrial groups, are contesting the rapid “urgent” approval of Bill 4/2025, which seeks to modernize the code. Its proponents say there’s ample opportunity for debate.

Many groups prefer delaying the proposal so each theme—family law, inheritance, damages, contracts—can be addressed separately, effectively “slicing” the reform.

Drafted by a panel of 38 jurists convened in August 2023 at the request of former Senate President Rodrigo Pacheco, the commission proposes changes to more than 1,200 of the Code’s 2,046 articles, last overhauled in 2002. The draft also introduces a new chapter on digital assets, covering cryptocurrencies and image collections on social media.

Several proposed family law updates will affect inheritance divisions. The definition of marriage would shift from “between a man and a woman” to “between two people,” to explicitly recognize same-sex unions. Corporate liability changes—like the introduction of “pedagogical damages”—could significantly impact business finances.

Under Article 944-A, paragraph 3, judges could impose fines alongside moral damages in cases of serious wrongdoing or repeated misconduct, “in order to prevent recurrence,” effectively turning compensation into a punitive deterrent.

The Industrial Federation of Minas Gerais (FIEMG), along with other civil society organizations, is spearheading a national effort to involve the productive sector in discussions around the bill. Paulo Ribeiro, FIEMG’s integrity and governance advisor, warns that the proposed changes could push companies into unforeseen indemnity obligations, since liability would hinge simply on whether damage occurred—not on fault. “Any lawsuit could put a small enterprise under,” he says.

Mr. Ribeiro also criticizes the expanded role of the judiciary under proposals tying contracts to social function, arguing courts could reinterpret virtually any agreement, and the judiciary could become overburdened.

In response, FIEMG plans to launch an Observatory of the Reform by month’s end—cross‑sector thematic groups to monitor the bill’s progress and propose alternatives.

Twenty legal organizations signed a letter urging the bill to pass through all congressional committees with amendment hearings, per Senate rules. They argue the bill implicitly demanded approval before year‑end when filed.

Diogo Leonardo Machado de Melo, a law professor and president of the São Paulo Lawyers Institute (IASP), part of the movement pushing for the reform, notes the bill includes structural changes never before debated—like extrajudicial DNA-based paternity recognition. “That needs judicial oversight, because being added as a parent affects insurance, school registration, and more,” he says. Mr. Melo also criticized the proposal to allow judges to impose pedagogical damages. “Granting magistrates the authority to set punitive damages deviates entirely from the current objective standard established in Article 402 [losses and damages],” the professor said. Regarding the chapter on digital assets, Mr. Melo raised concerns about possible legal overlap. “Won’t the ongoing discussions at the Federal Supreme Court over the Civil Rights Framework for the Internet affect this?”

He further noted that the French Civil Code, known as the Napoleonic Code, was enacted in 1804 and underwent a reform in 2015 that modified fewer than 300 provisions—primarily focused on the law of obligations and contractual practices.

Rodrigo da Cunha Pereira, president of the Brazilian Institute of Family Law (IBDFAM), which supports the proposal and took part in drafting the text, recalled that the current Civil Code spent 20 years in Congress before being enacted, and by then, was already outdated. “Of course, that doesn’t mean approval should happen overnight. Debate will certainly take years as the bill progresses through the many committees every PL must go through,” he said.

According to Mr. Pereira, an IBDFAM committee will monitor the bill’s progress and submit proposals to improve the draft. “In a democratic society, this is standard: a committee of legal experts makes a proposal knowing it will be modified,” he said.

Mr. Pereira noted that many of IBDFAM’s proposals were considered too bold and didn’t make it into the preliminary draft. “In the section on marriage, for example, we had suggested the phrase ‘union between people’ instead of ‘between two people’ to include polyamorous relationships,” he said.

Flavio Tartuce, the bill’s rapporteur, emphasizes there is no urgency in its advancement. “It must pass through thematic committees and will take at least two years. There’s no rush,” he says. He adds that all entities had been notified to participate in earlier public hearings but didn’t contribute.

Mr. Tartuce also rejects claims that the social‑function clause would harm commerce, noting the current Code already includes this in Article 2035’s sole paragraph. He argues new indemnity rules are grounded in Superior Court of Justice precedent (REsp 1.152.541), and argues that “today in Brazil, it’s cheaper to breach a contract because moral‑damages are low.”

“We’d welcome anyone proposing to shelve or sabotage the bill to join the debate and refine it,” says Mr. Tartuce. “That’s what a democratic society expects.”

*By Laura Ignacio — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil’s growth still a strength, but reforms needed, Goldman says

Foreign investors are returning, but high interest rates are a concern

 

 

 

 

06/23/2025

Brazil’s economic growth, despite a long monetary tightening cycle, remains one of the country’s key advantages. However, this expansion could be far greater if Brazil pushed forward with structural reforms, said Goldman Sachs executives during a visit to the country last week.

In an interview with Valor, Richard Gnodde, vice chairman of Goldman Sachs, and Kunal Shah, co-CEO of Goldman Sachs International and co-head of the firm’s Fixed Income, Currency and Commodities (FICC) division, said Brazil has returned to the radar of foreign investors. This can be seen in the inflow of international funds into the local stock market. Still, the high level of interest rates remains a concern, as it continues to burden Brazilian companies.

“I think Brazil’s remaining advantage is growth. The economy could double or triple over time. The right structural reforms would help unlock that growth. For me, that’s the most important thing—growth would allow the country to overcome its fiscal challenges. Not every economy has this opportunity,” Mr. Gnodde said.

“Growing 2.3% in a still very challenging macro environment shows the strength of the private sector,” added Mr. Shah, who visited Brazil for the seventh time and gave his first interview to a Brazilian media outlet.

Geopolitical distance

The war in the Middle East adds more uncertainty to markets, but Brazil’s distance from the conflict could prove beneficial. “You’re far from the specific areas of conflict, so people here can really focus on the country’s economic issues and opportunities, and maybe spend less time worrying about geopolitics. In a way, that’s an opportunity,” Mr. Gnodde said.

The global environment has also highlighted the importance of portfolio diversification, he said. “People have remembered that the United States isn’t the only economy in the world, nor the only place with opportunities.”

Brazilian economic challenges, its companies and sectors, and the ups and downs of the local economy are well known to international investors, Mr. Shah said. “Right now, they are beginning to allocate funds back to Brazil. Part of that is due to macro fundamentals. Interest rates are very high while inflation is falling. The latest inflation reading came in below market expectations. So, when you look at real interest rates, Brazil has one of the highest among major global economies. And with a relatively stable currency, that’s usually a good signal for the exchange rate and fixed income flows. It also boosts confidence,” he said. He added that equity investors and others willing to take on currency risk are likely to follow—something already being observed.

Fiscal limits

Mr. Shah said Brazil’s fiscal situation may have reached a limit, requiring a shift to avoid recessionary or unstable fiscal scenarios. “That’s where checks and balances kick in, and you start to see the cycle reverse. I think that’s why optimism is growing — because certain limits are being reached,” he said.

Still, he warned there are many questions about when there will be room for interest rate cuts. “While high rates are good for capital inflows, they place a huge burden on companies and the economy. It’s impressive how resilient the economy has been, and how growth remains strong even with such high rates. Our forecast for Brazil is 2.3% growth—above consensus. This cycle is lasting longer than many expected. Part of it is due to still-high fiscal spending, which worries investors,” Mr. Shah noted.

The 2026 presidential election is also on investors’ radar, he said, as they begin to evaluate “what changes might come or whether there will be continuity.”

IOF decree

Mr. Gnodde said that in recent weeks, the number of questions from foreign investors has increased, particularly after the government issued a decree raising the Financial Transactions Tax (IOF) in several cases. The measure is expected to be overturned by Congress. “It was constructive to see how that was revised. I think the feedback was clearly taken into account, and that helped ease investors’ concerns,” he said.

He added that what’s missing is a catalyst to bring in more consistent capital flows. “The premium you’re getting now to invest in Brazil is at a level where people feel comfortable. So that’s positive. The question is: what’s the catalyst that gets someone to make the decision today? Otherwise, they may just wait until tomorrow.”

Mr. Gnodde also highlighted the self-confidence of Brazil’s business leaders, who remain optimistic about the country’s future. “When you’re running a business and taking out a loan that’s going to cost you 15% to 20%, and you’re still able to run a successful company, you’re a good entrepreneur,” he said.

“If I were designing policy, I’d just try to make their lives a little easier and create a more favorable environment. With a tailwind instead of a headwind, this business community can achieve great things. We travel the world, and people say, ‘my God, interest rates are 3%, or 4%, or 5%—it’s so hard, it’s impossible.’”

Global-minded clients

The Goldman executives spent the week meeting with high-net-worth clients, institutional investors, and companies. “The client base here is unique. Brazilian investors are deeply rooted in a large domestic market, but also very connected to the global landscape. You can have in-depth conversations about what’s happening in the U.S., Europe, and other emerging markets, and that’s reflected in their portfolios. They are very sophisticated and well informed both globally and regionally. That makes conversations very productive,” Mr. Shah said.

“We’ve been in Brazil for 30 years. We’ve seen many cycles. Highs and lows across different sectors, with different strengths at different times. That’s why having a diversified business portfolio is extremely important. It’s great when the IPO market is booming, but even when it’s not, there are many other things we can do,” Mr. Gnodde said.

*By Fernanda Guimarães — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Top executives see long-term prospects but flag rates, inflation

Business leaders honored at “Executivo de Valor” award highlight interest rates, political risk, and legal uncertainty as key challenges

 

 

06/17/2025

For the 25 executives honored with this year’s Executivo de Valor award, high interest rates stand out as the top challenge to business performance in Brazil. Inflation, exchange rate, political instability, and legal uncertainty also rank among the main concerns.

Despite caution over the macroeconomic outlook, many companies are focused on the long term and plan to maintain their investment strategies. For some, however, growth plans still hinge on ongoing deleveraging efforts.

Opening the event at the Rosewood Hotel in São Paulo, Frederic Kachar, CEO of Editora Globo and Sistema Globo de Rádio, stressed the need for greater diversity in corporate leadership. “Of the 25 awardees, 13 are first-time winners, which shows how dynamic the market is,” he said. “We’ve seen good progress in female representation in recent years, but since 2023, that progress has stalled. We need to advance the diversity agenda through a structured approach to leadership development.”

To lead a winning company, Mr. Kachar added, discipline is essential to deal with disruptions amid fierce competition and evolving consumer behavior. “Only those who preserve an organization’s essence—with awareness, discipline, resilience, coherence, and vision—can truly carry its culture forward.”

Maria Fernanda Delmas, editor-in-chief of Valor, said companies today bear an enormous social and environmental responsibility. “A company will only be long-lasting and contribute to society if the people who pass through it are aware of that responsibility and use their power to drive the necessary changes,” she said.

Milton Maluhy Filho, CEO of Itaú Unibanco, Brazil’s largest private-sector bank, said reducing the country’s benchmark interest rate to a less restrictive level depends on fiscal policy. “If Brazil manages to ensure debt sustainability, the country will be better positioned to attract investment—both foreign and domestic,” he said. “There are many opportunities in Brazil, and we need to make the most of this window.”

Daniel Slaviero, CEO of energy company Copel, echoed that view. “The high cost of capital is always a concern, but I believe interest rates may be near their peak,” he said. “With improvements in fiscal conditions, we may see rates start to fall in the medium term.”

The impact of high rates will be felt soon, warned Belmiro Gomes, CEO of cash-and-carry retail chain Assaí. He sees this as one of the biggest risks to business investment, as rising corporate debt burdens eventually affect consumers—especially low-income groups, who are already hard-hit by inflation and now face tighter credit conditions. Assaí has reviewed some of its investments and adopted a more disciplined capital allocation strategy since early 2024.

Ricardo Ribeiro Valadares Gontijo, CEO of real estate developer Direcional, also pointed to the cost of capital as a serious issue. “It’s extremely high, and that makes many vital projects unfeasible,” he said. He acknowledged the need for rate hikes to curb inflation but argued they should last “only as long as strictly necessary,” given the long-lasting consequences. Home financing has been particularly affected, with available credit still largely reliant on savings accounts—which are seeing reduced inflows—and the Workers’ Severance Fund (FGTS). “Credit is the main engine of our business,” he said.

In the mobility sector, Bruno Lasansky, CEO of Localiza & Co., said higher interest rates are the top challenge. “We expect rates to keep rising through the end of the year, which impacts credit availability and cost.” His solution: focus on disciplined resource allocation and stronger returns. “If money becomes more expensive, you have to improve returns through more efficient revenue generation and cost control.”

Even so, Mr. Lasansky sees opportunities in fleet rentals, as corporate funding costs rise. Localiza plans to continue investing heavily this year, he said, especially in technology platforms for renting, subscribing to, or buying vehicles.

Fabio Faccio, CEO of Renner, which just marked its 60th anniversary, noted that while fashion retail has been performing well, “high interest rates and inflation are bad news for everyone.” He emphasized that Renner’s debt-free balance sheet is an advantage in the current environment. “High rates are a serious problem for anyone carrying debt.”

Jeane Tsutsui, CEO of medical diagnostics and healthcare services group Fleury, also pointed out that now is not a good time for companies to be overleveraged. “Given high interest rates, we’re lightly leveraged. We managed our debt well last year and are well-positioned for the current environment,” she said.

Rafael Vasto, CEO of Daki, a four-year-old online supermarket unicorn, flagged off-target inflation as another key concern. “Whether it’s high inflation or a Selic [policy] rate at 14.75%, both affect how we operate as a retailer buying and selling goods. That’s the biggest issue,” he said.

Roberto Valério, CEO of Cogna—the country’s largest education group—shares similar concerns. “Part of the challenge is macroeconomic expectations, not just interest rates but household income. Will rising rates and inflation reduce families’ purchasing power and lead to lower education spending?” he asked.

Legal uncertainty

Eduardo del Giglio, CEO of HR tech startup Caju, and Ana Sanches, head of mining giant Anglo American in Brazil, also raised concerns about legal uncertainty. “Regulatory changes are constantly under discussion,” said Mr. Del Giglio. Ms. Sanches added that resolving legal instability could even become “a competitive advantage for Brazil’s mining sector versus other markets.”

Carlos Hentschke, CEO of agribusiness and seed technology company Syngenta Seeds, agreed. “There’s legal uncertainty. This politically polarized, unstable environment isn’t good for any sector,” he said.

Raquel Reis, CEO of SulAmérica Seguros’ health and dental division, pointed to a deeper issue: over a decade of intense ideological conflict has hampered the creation of a clear, nonpartisan economic agenda. “Many countries know where they’re headed and what their top priorities are. Whether a right-wing or left-wing party is in power, the direction doesn’t change. Brazil still struggles to define that,” she said.

Christian Gebara, CEO of Telefônica Vivo, joined Mr. Hentschke and Ms. Tsutsui in highlighting currency volatility as a major hurdle. “Exchange rate fluctuations are what hurt us most. A dollar at R$6 directly impacts the price of the products we sell,” he said. Vivo resells smartphones and electronics, and any increase in product prices affects both consumers and the company’s service margins.

Echoing Ms. Sanches of Anglo American, Ricardo Neves, CEO of NTT Data in Brazil, said human capital development must become a national priority—especially amid growing use of artificial intelligence. As a global consulting firm, NTT Data sees a talent shortage in tech due to low digital literacy in Brazil. “This gap holds back business growth and the country’s readiness for the digital economy,” Mr. Neves said.

The 2025 Executivo de Valor awards were supported by master sponsors ArcelorMittal, Care Plus, Cemig, and Zeekr (official car of the event), with additional backing from Gol, Febraban, Rosewood Hotel São Paulo, and Eletromidia.

*By Valor  — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Family farming loan rates expected to keep stable amid budget strain

Agrarian Development Ministry aims to maintain subsidized credit for small-scale food production and agroecology

 

 

06/17/2025 

Facing a tightening federal budget and challenging macroeconomic outlook, Brazil’s Ministry of Agrarian Development (MDA) is working to preserve low interest rates in the upcoming 2025/26 Family Farming Plan. The ministry aims to keep annual rates at 3% for staple food production and 2% for agroecological farming within credit lines to be made available to smallholder farmers in July.

The ministry’s main challenge in negotiations with the Ministry of Finance is to secure the budget required to equalize interest rates over the long term. The Treasury’s spending on credit subsidies has risen significantly with the surge in the Selic benchmark rate, which jumped from 10.5% in July 2024 to 14.75%. That rate could change again following the Central Bank’s Monetary Policy Committee (COPOM) meeting scheduled for tomorrow, potentially increasing rural credit subsidy costs further.

“Our main goal is to maintain all the interest rates we’ve managed to achieve, especially for food production,” MDA Executive Secretary Fernanda Machiaveli told Valor. Current interest rates under the Family Farming Plan range from 0.5% to 6% per year, with lower rates for small machinery purchases (2.5%), agroecological activities (2%), and staple food production, including rice, beans, cassava, and milk (3%).

Increased mandatory allocation of funds raised from cash deposits by banks—from 30% to 31.5%—and a higher share of those funds directed to family farming—from 30% to 35%—will help secure more low-interest resources without increasing government spending on subsidies, said José Henrique da Silva, director of Financing, Protection and Support for Family Productive Inclusion at the ministry.

“We save public funds when requirements are higher. This was our initiative to ensure more money for family farming at a lower cost,” Mr. Silva said.

“The challenge is to ensure that food production continues to grow with support from federal financing. We already have enough resources to provide interest rate equalization, and the government has chosen to ensure that food is financed at special rates,” Ms. Machiaveli added.

While the ministry has not disclosed funding figures for the new plan, it expects to surpass the R$76 billion made available under the current 2024/25 cycle, which ends June 30. As of May, R$60.2 billion had been disbursed to family farmers—an increase of 5.5% over the same period in the 2023/24 cycle and nearly 21% more than the equivalent 11-month stretch in 2022/23. The executive secretary called the outcome a “success.”

In some financial institutions, subsidized Pronaf credit for production costs has already run out, indicating strong demand, Mr. Silva said. Despite this, the full amount initially offered is unlikely to be disbursed due to reallocation and adjustments during the cycle. “We expect the final total to reach R$65 billion by the end of June,” he added.

For the new Family Farming Plan, expected to be launched in the final week of June, the ministry plans to spotlight the sector’s role in addressing climate emergencies, especially as Brazil prepares to host COP30 this year. The initiative will include new credit lines, improved access to climate-related programs through revised rules on limits, interest rates, and eligibility, and incentives for transitioning to agroecological models.

The ministry wants to demonstrate that, although family farming is among the sectors most vulnerable to extreme weather events, it can be part of the solution due to its diversified production, natural resource preservation, and move away from chemical inputs. While farmers in Brazil’s semi-arid northeast have long adapted to drought conditions, other regions are also in need of climate-related support, Ms. Machiaveli noted.

The goal is to create “a Safra Plan that views family farming not only as a solution to hunger and a producer of healthy food, but also as a key to tackling the climate emergency through a more sustainable production model that can now be financed,” Ms. Machiaveli said.

On launch day, the ministry expects to sign several decrees signaling its climate commitments. One will establish the long-discussed National Program for the Reduction of Pesticides (Pronara), which still faces internal resistance within the federal government.

Another decree will introduce updates to the Minimum Price Guarantee Program for Sociobiodiversity Products (PGPMBio), managed jointly with the National Supply Company (Conab). The goal, Ms. Machiaveli said, is to improve program rules to better reach traditional and Indigenous communities. The revamped version, to be called SocioBio+, will be tested on products such as pirarucu fish, nuts, and rubber, which already have minimum prices but will now also guarantee fixed incomes for extractive workers.

*By Rafael Walendorff — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Lower House passes urgency motion to revoke IOF tax hike by 346–97

Vote paves the way for debate on financial tax increase, but final decision hinges on spending cuts

 

 

06/17/2025

The Brazilian Lower House approved Monday (16) by 346 votes to 97 an urgency motion to advance the vote on a legislative decree (PDL) that would revoke the recent increase in the Financial Transactions Tax (IOF). Despite the wide margin, there is still no set date for discussing the substance of the proposal, which depends on the federal government presenting spending cut measures and on the progress of a provisional presidential decree already sent to Congress. A vote on the merits is expected in two weeks, after the June holidays, allowing time for further negotiations.

Lower House Speaker Hugo Motta of the Republicans Party scheduled the plenary session for 6 p.m., local time, but proceedings did not begin until after 8 p.m. In the same session, lawmakers also approved another urgency motion, this time to fast-track a bill that updates the income tax bracket and exempts individuals earning up to two minimum wages. The proposal mirrors a provisional measure issued in April.

Mr. Motta spent the afternoon in meetings with party leaders and ministers Rui Costa (Chief of Staff Office) and Gleisi Hoffmann (Institutional Relations), who were met with numerous complaints from lawmakers.

At the end of the meeting, Mr. Motta said he reiterated to the two ministers what he had told President Lula the previous Saturday: Congress will no longer accept tax hikes as a way to balance public finances. He said the government had pledged to send a package of spending cuts. “We’re waiting,” he said.

In addition to opposition parties, several groups that control eight ministries—Brazil Union, Social Democratic Party (PSD), Progressive Party (PP), Republicans, and the Democratic Labour Party (PDT)—urged their members to vote in favor of the urgency motion. The PDT distanced itself from the government after the dismissal of former Social Security Minister Carlos Lupi, amid the National Social Security Institute (INSS) scandal. Other left-wing parties and the Brazilian Democratic Movement (MDB) voted against the motion.

Facing likely defeat, the government’s leader in the Lower House, José Guimarães of the Workers’ Party (PT), allowed his caucus to vote freely in an effort to mask the extent of resistance the administration faces. He added, however, that the government would not submit cost-cutting proposals affecting social programs.

Finance Ministry officials had already anticipated that the urgency motion would pass with more than 300 votes but believe congressional leaders remain open to negotiating alternatives that would prevent the decree from being overturned. Lawmakers aligned with the government told Valor they still see room for dialogue.

Many party leaders pushed for an immediate vote on the PDL itself, but a compromise prevailed, giving the government more time to present alternatives. Some of these options are included in the provisional measure sent to Congress last week, though the expectation is that the text will undergo major revisions.

Lindbergh Farias, the Workers’ Party leader in the Lower House, praised Mr. Motta’s handling of the process and said the urgency vote reflected some lawmakers’ desire to negotiate the content of the provisional presidential decree. He nonetheless defended the IOF increase, arguing it would help balance the budget without significantly impacting lower-income Brazilians.

“Where is the working class really affected by this IOF hike?” he asked. “This measure targets those at the top. In this country, we see sectors clamoring for fiscal adjustment, but always on the backs of the poor.”

Mr. Motta countered that lawmakers do not support balancing the budget at the expense of the poorest, but stressed the importance of avoiding harm to “those who produce, create jobs, and generate income,” referring to the business sector.

During the meeting with party leaders before the vote, Ms. Hoffmann was met with complaints that went beyond delayed payment of congressional earmarks or the content of the provisional decree. One lawmaker described the situation to Valor: “There are so many complaints on so many issues that paying the amendments won’t even come close to solving the government’s problems in the House.”

*By Murillo Camarotto  and Beatriz Roscoe  — Brasília

Source: Valor International

https://valorinternational.globo.com/

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