NEWSLETTER MURRAY ADVOGADOS
May 2026
05/06/2026
BRAZIL’S MANUFACTURING SECTOR DEEPENS TRADE DEFICIT IN Q1
Industrial exports lag broader trade growth as rising imports of vehicles, pharmaceuticals offset stronger aircraft sales
While Brazil’s overall trade surplus increased 47.6% in the first quarter compared with the same period of 2025, the manufacturing industry posted a trade deficit of $19.7 billion, deepening its negative balance by 1.2% over the same time frame. Exports of manufactured goods rose just 2.8%, less than half the pace of total exports, which grew 7.1%. Imports of industrial goods increased 2.3%, one percentage point above the country’s total import growth.
The figures come from the Institute for Industrial Development Studies (IEDI), based on data from the Secretariat of Foreign Trade (Secex/MDIC). The study analyzed manufacturing trade performance across four levels of technological intensity, following Organisation for Economic Co-operation and Development criteria: high technology, medium-high, medium, and medium-low technology.
The report shows that despite strong export performance in sectors such as aircraft manufacturing—which also saw a decline in imports—imports increased in key industries such as automobiles and pharmaceuticals. The medium-low technology group, which usually offsets deficits in higher-tech industries, remained in surplus, though with a smaller positive balance than in the first quarter of 2025.
The manufacturing deficit from January to March was mitigated by strong export performance in high-technology industries, particularly aircraft manufacturing, said Rafael Cagnin, chief economist at IEDI.
Brazil’s total exports of manufactured goods reached $43.9 billion in the first quarter of 2026, a record level in current dollar terms for the period and $1.2 billion above exports in the same months of 2025. Growth in aircraft export revenue accounted for 59.6% of this increase.
Cagnin said aircraft exports are volatile because they involve high-value products tied to the delivery schedule of Brazil’s leading manufacturer, Embraer. He also noted a relatively weak comparison base. Early in 2025, he said, major trade tensions were already emerging as markets awaited the direction of U.S. President Donald Trump’s tariff policy. During the last year, however, aircraft were exempted from Trump’s sweeping tariffs and effectively “shielded” from harsher trade measures. “That allowed the sector to continue operating relatively normally,” he said.
In addition, Embraer increased aircraft deliveries in the first quarter of 2026, especially in commercial aviation. “There is a backlog among major global aircraft manufacturers, and Embraer has managed to expand market share in this environment. The company has been innovating, moving further into larger aircraft segments with competitive energy performance,” Cagnin said. He added that Embraer has also expanded into defense and security, an area seeing growing demand amid rising global military spending. “Although it is only one quarter, the period reflects the company’s portfolio diversification strategies over recent decades.”
Even with stronger aircraft exports, the IEDI report shows that the high-technology group still posted a trade deficit of $11.4 billion in the first quarter, maintaining its traditionally negative balance, though improving from the $12.5 billion deficit recorded in the same period of 2025. In addition to aircraft manufacturing, the high-tech group includes pharmaceuticals and electronics. Those two industries stood out for rising imports, up 21.6% and 5.3%, respectively, from January to March compared with the same period last year. Overall imports for the group, however, fell 2.5%, also influenced by aircraft imports, which declined 45.7% over the same comparison.
A negative highlight, according to Cagnin, came from the medium-high technology segment. The group—which includes weapons, automobiles, machinery and equipment, and medical instruments, among others—posted a 4% decline in exports in the first quarter compared with the same period of 2025. But the economist said imports were more concerning. Imports in the group rose 3.6%, driven largely by automobiles, which jumped 23.6%.
“It is the China effect, with electric vehicles, which highlights a major challenge for Brazil’s automotive industry both domestically and abroad,” Cagnin said. Chinese competitiveness, he noted, extends beyond the automotive sector. “China’s gain in the manufactured-goods market share across Latin America is increasing, often displacing Brazilian industry not only because it produces similar products, but because it has technological dynamism that allows it to capture market share with new products. We have been viewing the vehicle issue more from a short-term perspective, but it reflects a structural transformation of the market and very strong competitive pressure from innovative products.”
Overall, the medium-high technology group closed the first quarter with a trade deficit of $20.2 billion. While deficits are typical for the segment, this year’s negative balance widened 7.8% compared with the same period of 2025.
The IEDI report highlighted positive performance in medium-technology goods, whose exports rose 10.6%, driven by the metallurgy industry, which increased 15.3%. Imports in the group also rose, but at a much slower pace of 2.9%. The segment closed the first quarter with a deficit of $680 million, significantly lower than the $1.2 billion deficit recorded in the same period of 2025. The report noted, however, that the negative balance at the start of this year was affected by the accounting treatment of oil platforms, which, since last year, have distorted certain quarterly figures. Excluding shipbuilding, where these assets are recorded, the medium-technology segment would have posted a surplus of $1.8 billion from January to March. In addition to metallurgy and shipbuilding, the medium-technology group includes industries such as rubber and plastics manufacturing and non-metallic mineral products.
The medium-low technology group, meanwhile, was a negative surprise, Cagnin said. Traditionally in surplus, the segment typically offsets deficits in industries with greater technological intensity. According to the economist, some sectors face structural innovation gaps that translate into chronic trade deficits. “Especially in higher-tech industries, with a few notable exceptions such as aerospace.”
The medium-low technology segment—which includes apparel, footwear, wood products, furniture, metal products, petroleum products, food, and beverages—has historically helped cushion these deficits. “But this group has been posting very weak, stable performance,” he said.
According to the report, exports in the medium-low technology group were virtually flat, rising just 0.2% from January to March 2026, while imports increased 4.2%. The stagnation in exports is notable, the study said, as the group traditionally posts large trade surpluses due to industries linked to commodity processing. Among the four technological-intensity groups, it was the only one to record a trade surplus, at $12.6 billion. Even so, the surplus was 3.1% lower than in the first quarter of 2025.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/06/2026
EMBRAER, AIRBUS COMPETE FOR KLM CITYHOPPER FLEET
Competition involves order for 25 aircraft from KLM’s regional aviation subsidiary; Embraer currently holds exclusivity in the fleet
Embraer’s E2 jet is once again in the final stages of a competition with Airbus and its A220 model. This time, the contest is to secure an order for 25 aircraft from KLM Cityhopper, the regional aviation subsidiary of KLM. Maarten Koopmans, managing director of KLM Cityhopper, told Valor that negotiations are ongoing, and a decision is expected by the end of this year. The company’s goal is to replace part of its fleet of E1 (previous generation) aircraft from the Brazilian plane maker.
Currently, all of the airline’s aircraft are from Embraer—a total of 61 jets comprised of 25 E195-E2s, 19 Embraer 190s, and 17 Embraer 175s. Depending on the outcome of the competition, Embraer could lose its exclusivity with an important regional partner.
Koopmans explained that in 2019, KLM Cityhopper placed an order for 25 E2-195 aircraft, with an option to order an additional 25 units. By the end of 2025, the last aircraft from the firm order was delivered. Now, the airline is exploring other opportunities while negotiating the terms to decide on the additional jets with Embraer.
“We are in the process of reviewing our options. The work needs to be completed this year,” he said, emphasizing that the new aircraft will be used to replace part of the E1 fleet, particularly the E190.
Embraer and Airbus are currently engaged in a fierce global competition in the segment of aircraft with up to 130 seats. In December, the French company took the lead by securing a contract with Argentine low-cost airline Flybondi for a firm purchase of 15 A220-300s and 5 purchase options.
On the other hand, Embraer secured a significant order for up to 74 E2 aircraft from Latam. Of the total, 24 are firm, with a list price value of $2.1 billion. This acquisition was a victory for the Brazilian company, which has been seeking to expand its operational fleet in the country for years—currently, only Azul operates its commercial aircraft in Brazil.
KLM Cityhopper was founded in 1991, but its relationship with Embraer began only in 2008. That year, the airline received its first jet from the Brazilian plane maker. Until then, the entire fleet consisted of aircraft from Fokker, an important Dutch manufacturer back then. Fokker went bankrupt in 1996, and Cityhopper had to seek a new partner. The last Fokker aircraft left its fleet in October 2017.
Koopmans highlighted that regional aviation plays a central role in Europe and for KLM’s business. “If you look at KLM, we connect Europe. It’s the concept of connecting smaller planes with larger ones,” he said. Cityhopper operates 400 daily flights and is the largest in the segment in the region.
According to data from the European Regions Airline Association (ERA), the segment is responsible for transporting about 52 million passengers per year, which represents almost half the passenger volume that Brazil handles annually. Koopmans is vice president of the ERA.
Despite the optimism, the executive stated that the oil crisis poses various challenges. The main risk, he pointed out, is the reduction of routes and frequencies in less profitable markets. “The situation is complicated for the industry. We have been able to hedge fuel for the coming months,” he said.
The company made some minor changes to its flight schedule in Europe for May. These changes resulted in 80 fewer round-trip flights starting April 27. However, the cut represents less than 1% of the flights scheduled for the period.
Embraer and Airbus did not immediately reply to Valor’s requests for comment.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/07/2026
SPENDING WATCHDOG CLOSES CASE ON COMPENSATION FOR ELECTRICITY FIRMS
Decision keeps burden on consumers, who will continue paying through utility bills until 2028
Brazil’s Federal Court of Accounts (TCU), a public spending watchdog, has shelved an audit proceeding that examined the methodology used to define the multibillion compensation payments made in recent years to power transmission companies, totaling about R$60 billion. The TCU’s discussion of the matter came nearly a decade after the audit process began in 2017.
The compensation is paid to power transmission companies whose contracts were renewed in 2012 under provisional presidential decree 579/2012 for assets that had not yet been fully amortized. The legislation established compensation payments for those non-amortized assets, with the total amount estimated at R$62 billion.
Initially, those payments were expected to be made over eight years, as established by a Mines and Energy Ministry ordinance published in 2016. The compensation process, however, sparked controversy and legal disputes over the calculation methodology. In 2017, an injunction suspended part of the payments, which were only resumed in 2020.
Last year, when reviewing reconsideration requests filed by power sector associations, the board of Brazil’s electricity regulator ANEEL reduced the amount owed by about R$5.6 billion, at June 2025 prices. The closure of the TCU case therefore preserves the burden on electricity consumers, who will continue making payments through their bills until 2028.
Within the TCU, the debate centered on whether the government’s regulatory framework was lawful, particularly regarding the appropriateness of the adjustment factor used to update compensation values in order to offset the transmission companies’ temporary lack of access to those funds.
Initially, the TCU’s technical staff argued that the adopted calculation rule was illegal and proposed ordering the Mines and Energy Ministry to suspend the provision establishing the remuneration factor as early as 2019. In 2020, then-reporting member Aroldo Cedraz requested additional analysis. In 2022, the technical staff reaffirmed its earlier position. Cedraz left the TCU in February of this year.
In 2023, however, the prosecutor’s service attached to the TCU disagreed with the technical staff and supported the legality of the ordinance and the government’s rule, arguing that the selected calculation factor was intended to compensate transmission companies for lack of access to funds owed between 2013 and 2017, a period in which the assets were effectively “sterilized,” without securitization potential and requiring companies to rely on their own capital.
In December 2025, the issue returned to the agenda, and Cedraz proposed following the technical staff’s recommendation by ordering the Mines and Energy Ministry to partially revoke the rule and requiring ANEEL to take steps to ensure proper compensation for transmission companies.
The judgment was suspended, however, after Benjamin Zymler requested time to examinate the case records. In February 2026, Zymler presented a vote defending the existing criterion on the grounds of legal certainty and regulatory stability.
At the time, Zymler emphasized that revising the payments after such a long period would create systemic disruption, given that about 81.14% of the amount were expected to be settled by the 2025/2026 cycle. Cedraz ultimately aligned with the reviewer’s recommendation despite some differences.
Also in February, Bruno Dantas proposed converting the audit into a diligence and requesting further clarification from the Mines and Energy Ministry and ANEEL.
“The new elements presented by the Mines and Energy Ministry and ANEEL confirm the hypothesis I expressed in my voting statement: the exact amount of compensation was unknown at the time the contract amendments were signed, which made prior technical studies quantitatively and objectively assessing the economic advantages of the renewal impossible,” said Dantas in his opinion.
Dantas added, however, that the governance and planning failures identified, combined with the significant passage of time, made it impossible to issue a reliable judgment on the adequacy of the compensation calculation and adjustment procedures.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/07/2026
BRAZIL PLANS NEW DEBT RENEGOTIATION PROGRAM FOR INFORMAL WORKERS
Measure Aimed At Borrowers Current On Payments But Facing High Interest Rates Could Be Announced By Early June
Finance Minister Dario Durigan said on Wednesday (6) that the Lula administration is studying a new debt renegotiation program aimed at borrowers who are current on their payments but face high borrowing costs, such as informal workers. The measure is expected to be announced between late May and early June.
Earlier this week, the government launched version 2.0 of the Desenrola debt renegotiation program, targeting delinquent borrowers ranging from middle-class consumers to students financed through the Student Financing Fund (Fies) and small family farmers.
“Informal workers, a group we monitor very closely, do not have fixed monthly income, recurring salaries, or stores with a history of recurring revenue. They need to earn their income day by day, often in a very irregular way. And they are the ones paying the highest interest rates. We are studying a credit line for informal workers to be announced in late May or early June,” Durigan said in an interview with the “Bom Dia, Ministro” program.
Regarding the Fies component of the new Desenrola program, the minister said the government is expected to introduce incentives to encourage students to remain current on their payments.
“Borrowers who are up to date on their payments will also receive some kind of future incentive to continue paying on time. This is being discussed with Banco do Brasil and Caixa Econômica Federal, which are the two main banks operating Fies with us. Together with the initiative for informal workers that I mentioned earlier, we will soon present these measures to the country,” he said.
The new Desenrola program will allow Brazilians earning up to five minimum wages per month to renegotiate debts contracted through January 31, 2026, that are between 90 days and two years overdue. Renegotiations will take place directly on each bank’s platform for credit card debt, overdraft facilities, and personal loans.
The average discount will be 65%, but may range from 30% to 90% depending on the type of debt and how long it has been overdue. The maximum interest rate will be 1.99% per month, close to the lowest levels available in the market.
Borrowers will have up to 48 months to repay, with 35 days to settle the first installment. The limit for the renegotiated debt, after discounts, will be up to R$15,000 per person per financial institution. The minister said the renegotiation could benefit as many as 20 million people.
For Fies borrowers, debts overdue by more than 360 days may be renegotiated with discounts of up to 99% for individuals enrolled in the federal government’s Cadastro Único social registry. For borrowers outside the registry, discounts may reach 77%.
For more recent debts overdue by more than 90 days, borrowers will receive discounts on interest and penalties, as well as a 12% reduction in principal for lump-sum payments, or may repay in up to 150 installments with all interest and penalties waived. Around 1.5 million students could benefit from the measure.
Source: Valor international
https://valorinternational.globo.com/
_____________________________________
05/07/2026
CHINESE INVESTMENT IN BRAZIL JUMPS 45% TO $6.1BN IN 2025
Mining becomes new frontier for Chinese capital, while electricity remains top sector, Brazil-China Business Council survey shows
With a strong bet on mining and gains in manufacturing, Chinese investments in Brazil are becoming more diversified and grew 45% last year from 2024, to $6.1 billion, the highest amount since 2017. The figure was enough to make Brazil the top destination for Chinese investment abroad in 2025, a survey by the Brazil-China Business Council (CEBC) shows.
By number of projects, there were 52 Chinese ventures in Brazil in 2025, 33% more than in 2024 and a record in the series, which began in 2010.
The electricity sector remained the largest recipient of investment, but the “new frontier” is mining, which ranked second. Investment in the sector more than tripled from 2024, reaching its largest share of total Chinese investment in Brazil since 2007.
The automotive sector also stood out, ranking third in invested value, followed by oil and information technology.
The CEBC survey also shows that Brazil attracted more Chinese investment than any other country in the world in 2025, with a 10.9% share of the total invested. It was followed by the United States, with 6.8%; Guyana, 5.7%; Indonesia, 5.4%; and Kazakhstan, 4.4%. Over the past five years, Brazil has always ranked among the top five global destinations for Chinese investment. The last time the country topped the ranking was in 2021.
The study considers confirmed investments in projects by companies from mainland China or by companies based in other countries with Chinese shareholding.
The study is based on news reports, company websites, municipal and state government portals, as well as information provided directly by representatives of Chinese companies and confidential sources.
Tulio Cariello, the author of the survey and CEBC’s content and research director, notes that, depending on the database, some surveys may not show Brazil as the top destination for Chinese investment, but the country is still very close to that position. “Brazil is a very consolidated destination for Chinese investment and will continue to be.”
China’s performance in Brazil outpaced total foreign investment in the country, which rose 4.8% in 2025, to $77.7 billion. The increase was also higher than China’s total investment abroad, which grew 1.3%, to $145.7 billion.
Under the Central Bank’s criteria, which use a different methodology, the United States was the largest direct investor in Brazil last year, with $8.47 billion in equity capital, down 29% from the previous year.
Investment profile
For Cariello, the main highlight in 2025 was the greater diversity of Chinese investments in Brazil. Although electricity remained the largest sector by value, with a 29.5% share of the total, he says the strong expansion of mining projects changed the profile of Chinese investment in the country. Mining accounted for 29%.
The survey shows that mining investments totaled $1.76 billion in 2025, more than triple the $557 million reported in 2024. “The electricity and oil sectors had already been very strong. Electricity, in particular, has received large investments since 2010, with virtually no year in which the sector did not stand out. But new sectors are competing for spots on the podium,” Cariello said.
“Mining is the major highlight of this survey. Investments in the sector were made through mergers and acquisitions. In other words, a Chinese company buying a foreign or even Brazilian company operating here, which involves billions of reais. This is a new frontier for us to watch. Since the early 2010s, Chinese companies had already been investing in the area, but there has been a very strong rebound because there is now a race for strategic minerals.”
Cariello recalls a recent investment by a U.S. company in rare earths in Brazil. “The mining sector opens up the need for Brazil to think about a strategy in the race for critical minerals that benefits the country over the long term. That would allow Brazil to attract investments with some kind of technology transfer or that place the country in other parts of the production chain, not only in metal extraction, but also in processing and even component manufacturing. Having an electric battery plant here, for example, would be interesting.”
The study notes that the profile of Chinese investment in Brazil is particularly relevant in light of Beijing’s ambitious decarbonization policy. China, the survey says, leads the development and manufacturing of several products linked to the energy transition, which is driven by rising demand for critical minerals.
Cariello says Brazil stands out in this context because of the diversity of strategic minerals it holds. He cites a survey by the Economic Commission for Latin America and the Caribbean (ECLAC) showing that Brazil has 26.5% of global graphite reserves and is the second-largest holder of rare earths, with a 23% share, behind only China itself.
Mining, he says, also helped push Chinese investment farther into Brazil’s interior, although the electricity sector remains the main driver of geographic diversification, especially through transmission projects. Oil also contributes to that trend, he notes.
“We saw a larger share for states in the North region now, the highest in history, because of China’s investments in the Equatorial Margin region, at the mouth of the Amazon River. These are offshore investments and therefore in federal waters, but since we are talking about the sea, these states may receive royalties, and the investments will also create jobs and opportunities for people in the region.”
Chinese investment in the oil sector totaled $804 million in 2025, 24% less than in 2024. Even so, the industry accounted for 13.3% of China’s total investment in Brazil, ranking fourth.
One highlight was oil company CNPC, which acquired, in partnership with U.S.-based Chevron, nine blocks in an auction held by Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP), all in the region at the mouth of the Amazon River.
The survey shows that 2025 also set a record for the number of states with Chinese investment projects. There were projects in 20 states last year, compared with 14 in 2024. The previous record was 17, in 2019.
Automotive and green projects
Ranking third among the sectors that received the most Chinese investment in Brazil in 2025, automotive took a 15.8% share. The study estimates that at least $965 million was invested in the sector, up 66% from the previous year. The final amount may be higher, the survey says, because some investments did not have their value disclosed.
In 2025, the number of Chinese investments in Brazil in sustainability and green energy, including hydropower, solar, wind and the electrified-vehicle industry, reached a record 31 projects, posting growth for the fifth consecutive year.
Although the number rose in absolute terms, these segments’ relative share of total projects fell to 60% from 69% in 2024. The loss of share, however, does not indicate lower interest in new green ventures, the survey says.
Instead, it reflected growth in investments in other sectors in 2025, mainly oil and mining.
Looking ahead, Cariello says Chinese investment in Brazil is expected to remain at relatively high levels by recent historical standards.
“We should continue to see more investment in renewable electricity, as well as investments in manufacturing in general, especially those directly linked to the energy transition. We see interest from other Chinese electric-car makers in having plants in Brazil, in addition to those that are already producing or have already signed partnerships in that direction. And mining should be a new chapter in Brazil-China investment relations.”
Source:Valor International
https://valorinternational.globo.com/
_____________________________________
05/08/2026
BRACELL SECURES R$1.5BN FROM BTG FOR FOREST PLANTING
Funds will support eucalyptus cultivation on degraded land in Mato Grosso do Sul, where company plans new mill
Bracell, the pulp producer owned by Asian conglomerate Royal Golden Eagle (RGE), has secured a R$1.5 billion credit line from BTG Pactual to finance eucalyptus planting on degraded land in Mato Grosso do Sul state, where it plans to build a new pulp mill with estimated investment of $4 billion.
BTG, the biggest winner among private banks in the second auction of Eco Invest Brasil, a program that combines public and private funding to leverage investment in sustainable projects, has a total of R$4.9 billion to allocate toward the productive restoration of degraded land in Brazil, which was the focus of this round.
With the amount offered in the second auction—made up of 40% Treasury resources and the remainder raised by BTG from investors—the bank committed to enabling the restoration of 164,000 hectares of degraded land, converting them into agricultural and forestry production systems.
The Bracell contract, representing roughly one-third of the total area BTG aims to restore, was the first agreement signed and will allow for the recovery of 54,000 hectares in Brazil’s Cerrado biome. The financing line has a 10-year term, and Bracell could begin construction of the new facility in Bataguassu later this year. Under that timeline, the mill, with annual production capacity of 2.8 million tonnes, could begin operating in 2029.
“This transaction is a win-win: financing terms compatible with eucalyptus’s seven-year cycle, at competitive cost, while also restoring degraded land,” said Rogerio Stallone, the BTG partner responsible for corporate credit.
According to the executive, the favorable cost and maturity terms offered through Eco Invest ultimately made possible an investment in land restoration that Bracell might not have pursued under standard market conditions.
In an emailed statement, Bracell’s vice president of finance banking, Claudio Pitchon, said the operation will enable “the expansion of our forest base, while also contributing to carbon capture and storage.”
According to Pitchon, Bracell is currently one of Brazil’s largest green loan borrowers. “The structure of this transaction reinforces the advancement of financial solutions aligned with Brazil’s climate agenda, connecting private capital to projects with verifiable environmental impact,” he said.
Bracell, which operates mills in Bahia and São Paulo and is one of the world’s largest producers of dissolving pulp, does not disclose the size of its eucalyptus land holdings in Brazil. The company has pledged, however, to preserve one hectare of native vegetation for every hectare of eucalyptus planted.
According to Rafaella Dortas, BTG’s partner and ESG director, the bank assessed the socio-environmental requirements for participating in the second Eco Invest auction and concluded it had the internal capacity to manage the program’s required monitoring, including hectares restored and carbon stored. “It is a financially competitive transaction and operationally feasible from a risk perspective,” she said.
In a separate initiative, BTG has also recently raised $1.24 billion for its reforestation fund, which is currently considered the largest in the world.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/11/2026
COPOM RATE CUT CLOUDS VIEW OF ‘REACTION FUNCTION’
Analysts say Central Bank is buying time after oil shock, but strategy may prove costly if inflation expectations keep drifting higher
The Central Bank’s Monetary Policy Committee (COPOM) delivered an unusual decision in late April, cutting the Selic base rate by 25 basis points even as its inflation forecasts deteriorated for the relevant policy horizon.
Since the committee formally began targeting the 18-month-ahead window for monetary policy in mid-2024, this was the first time the benchmark rate and inflation projections moved in opposite directions. The decision has raised caution among market participants, who now see less clarity in the Central Bank’s reaction function.
With the inflation picture worsening significantly after the oil shock caused by the war in the Middle East, investors believe the COPOM is betting that oil supply will normalize and is trying to preserve the easing cycle to gain time, a strategy that could become costly later.
That view is shared by Juliano Cecílio, chief economist at asset manager Adam Capital, who disagrees with the decision to keep cutting the Selic amid current inflation above target and unanchored inflation expectations, both in the market and at the Central Bank itself. He also notes that Brazil’s economy was already feeling the effect of a significant fiscal impulse, which supported activity and service prices throughout 2025 and early this year.
“We had the largest forecast error in the IPCA’s historical series in February, before the war began, and that was basically caused by service inflation,” Cecílio said, referring to Brazil’s benchmark consumer price index. “Right after that, when the war came, a narrative emerged that expectations rose only because of that [in the Central Bank’s Focus survey], but before the conflict there was already a series of fiscal stimuli and an acceleration in service inflation.”
The three-month moving average of annualized and seasonally adjusted underlying services inflation, a less volatile measure than the monthly reading and widely used by the market, shows signs of acceleration. The measure stood at 4.74% in December, 5.41% in February, and 5.32% in March. Some firms estimate that April’s IPCA may show a new acceleration in underlying services inflation, to around 5.7%.
For Cecílio, the oil shock acted as a “smokescreen” that kept the Central Bank from identifying the core problem: “An economy strong enough to prevent service inflation from cooling or to keep it accelerating.”
More tolerance
Cecílio also sees greater leniency by the monetary authority toward the worsening inflation forecasts, although he says the phenomenon is neither new nor limited to Brazil. A study by Adam Capital shows COPOM’s sensitivity to deteriorating projections has declined since the pandemic, a trend also seen at major central banks such as the Federal Reserve.
“In 2026, we mark the sixth consecutive year in which the PCE deflator [the Fed’s preferred inflation gauge] is above the 2% target. That is an unusual situation,” Cecílio said. “The Central Bank [of Brazil] looks at these post-pandemic examples of greater tolerance for inflation deviations, and that helps explain this looser reaction function.”
Cecílio said reduced sensitivity to expectations has already led to monetary-policy mistakes in recent years, including the Selic-cutting cycle in 2023 and 2024, which was followed soon after by a 450-basis-point increase in the benchmark rate between September 2024 and June 2025.
“Central banks did not make bets in the past. They always worked with the most conservative premise possible, and that no longer seems to be happening,” Cecílio said. He sees the COPOM losing credibility in the current rate-cutting cycle, as longer-term IPCA expectations become further unanchored.
Since the start of the war, the median Focus survey forecast for 2028 inflation has risen to 3.64% from 3.5%, a development the COPOM itself has flagged with concern in its recent communication.
Clearer threshold
The additional drift in inflation expectations was highlighted by BTG Pactual as a warning sign for monetary policy. “The deterioration reduces the comfort to extend the cycle without making the reaction threshold clearer, that is, which conditions would lead to a pause, an end to the cycle, or greater restriction. Without that, the risk increases of further deterioration in the anchoring of expectations and in the credibility of communication,” economists Tiago Berriel and Iana Ferrão said.
In a note to clients, they said the Central Bank’s reaction function has changed and has become “harder to infer.” BTG believes qualitative judgment now carries more weight in the monetary authority’s decision-making process, while projections provide less guidance on the next steps for interest rates.
“It has become less clear what [level of] deterioration in projections, expectations, or core measures would lead the COPOM to stop the cycle,” Berriel and Ferrão said. That is because the current Selic-cutting cycle rests on two points: the extended period of monetary restriction and a greater qualitative assessment of how persistent the shock caused by the war in Iran will be.
For Ian Lima, active fixed-income manager at Inter Asset, the Central Bank is trying to buy time to better understand the effects of the oil shock on Brazil’s economy while preserving the easing cycle and signaling a bias toward further Selic cuts in upcoming decisions. “By continuing to ease, the Central Bank keeps the interest-rate market pinned down in some way. If it pauses the cycle, the market could flirt with a Selic hike, and that would tighten financial conditions, which it does not want to deliver. It is a bet, but it is easier than for other central banks in Europe and Asia,” Lima said.
Lima sees the impact of the war on Brazil as milder and says the Central Bank has “fat to burn” after raising the Selic to 15% last year, its highest level in almost two decades, and holding it there for nine months.
“Some say the increase to 15% was made precisely to put [interest rates] at a restrictive level beyond any doubt,” Lima said. Brazil’s real interest rate is now around 10%, well above most market estimates of the neutral rate, which stand near 6% to 7%.
“I think this slow cycle of cuts fits the current context. The COPOM has some fat and is burning it. If it had left the Selic unchanged at 15%, expectations would be rising because of oil, and it might have had to raise rates,” he said.
Room for cuts narrows
Still, the space for further Selic cuts has narrowed “substantially,” said Aurélio Bicalho, chief economist at Vinland Capital. He said the Central Bank is “acting in a way that manages some of this uncertainty and tries to continue the cycle for some time.” In the asset manager’s monthly call, Bicalho said the Central Bank is likely to keep lowering the Selic at the current pace of 25 basis points until September.
Although he agrees that monetary policy has been working to cool activity, a point emphasized by the Central Bank, Bicalho said that has never been used as a justification for easing interest rates. He noted that Brazil is part of a group of countries with high inflation, unanchored expectations, and credibility problems at the monetary authority, which should force the COPOM to pause the cuts before the last quarter.
“It will have to stop [the cycle] because the inflation outlook is very unfavorable. The IPCA will move toward 5% this year and, if the Central Bank continues the cycle for much longer, inflation in 2027 will also be much higher,” he said.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/18/2026
BRAZILIAN BEEF DOMINATES CHINA’S FOOD SERVICE SECTOR
Study says Brazil could expand further through hotpot chains and digital retailers
The main segment currently served by Brazilian beef exports in China is the food service industry. Brazilian product is already estimated to account for more than 60% of the beef used in casual dining restaurants, fast-food chains, and hotpot restaurants, according to a study by Leandro Feijó, Brazil’s agricultural attaché in Beijing.
The study suggests Brazil could further expand its presence in the Chinese market through partnerships with Chinese hotpot chains and both physical and digital supermarket retailers, as well as by selling meat-and-vegetable kits for home hotpot preparation, increasing visibility on food delivery apps, and promoting tasting campaigns through livestreaming platforms.
Chongqing is one of China’s four municipalities directly administered by the central government, alongside Beijing, Shanghai, and Tianjin. With more than 3,000 years of history, the city was built along the banks of the Yangtze River. It has more than 20,000 bridges and viaducts connecting its multilayered urban structure, where streets and plazas rise dozens of meters above ground level and even a metro line literally passes through a residential building.
A key growth engine for central and western China, Chongqing has expanded rapidly and is now home to more than 32 million people across its urban core and districts spread over 80,000 square kilometers, an area roughly comparable to the Brazilian state of Santa Catarina.
But hotpot is not the only avenue for growth in Brazilian beef consumption in China. During an event hosted by the Brazilian Beef Exporters Association, or ABIEC, in Chongqing, renowned chef Mao Xiaojun presented reinterpretations of traditional Chinese dishes using Brazilian beef, including spring rolls and Sichuan-style multi-flavored beef, inspired by neighboring Sichuan province. Mao owns the Silver Pot restaurant in Chengdu, which earned a Michelin star for four consecutive years.
“These are dishes that combine global ingredients with local cuisine. It is the globalization of cuisine,” he said while preparing the recipes. “Brazilian beef has excellent quality,” he added.
Brazilian beef is also widely used by China’s food processing industry. Chongqing Lilai Food is one example. The company, visited by Valor, produces dried beef snacks, a product considered part of China’s intangible cultural heritage. With annual revenue of about R$370 million, Lilai Food leads its local market. In addition to retail operations, the company has built a strong digital sales strategy through apps such as TikTok and WeChat.
Several Brazilian companies export forequarter cuts to the factory, located 25 kilometers from downtown Chongqing. Inventory at the facility included products from at least three Brazilian meatpackers: Naturafrig, MBRF, and Minerva.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/18/2026
BRAZILIAN AIRLINES CUT FLIGHTS AS JET FUEL PRICES DOUBLE
Costs surge after Middle East war, forcing carriers to trim 93 daily flights in May so far and focus on more profitable routes
The surge in oil prices triggered by the war in the Middle East has led airlines in Brazil to draw up a survival plan for the coming months. Jet fuel, which has historically accounted for about 30% of their operating costs in the country, has doubled since February.
At the same time, the industry is concerned about the expiration, on May 31, of tax incentives for aviation kerosene, known in Brazil as QAV.
On April 2, data from the SIROS system of Brazil’s National Civil Aviation Agency (Anac) showed airlines expected to offer 2,193 flights a day in May in the Brazilian market. The same query on May 12, however, showed a projected daily supply of 93 fewer flights, a 4.3% drop.
With fewer takeoffs, Brazil lost about 14,000 seats a day this month. The data were compiled from Anac’s system by the Brazilian Airlines Association (Abear) at Valor’s request.
For May as a whole, the estimate before the crisis was for 67,980 flights, later reduced to 65,100. In May 2025, the figure was 66,300.
The cuts, however, vary by region. More profitable routes are being preserved, while less profitable segments are losing ground.
The survey shows that the most affected destination was Acre, which lost 14.7% of its expected flight supply for May. Amazonas followed, with a 13.6% decline, then Pernambuco, down 11.2%; Goiás, 9.8%; Pará, 9.3%; Paraíba, 6.3%; and Minas Gerais, 5.6%.
The figures also show that the situation is likely to worsen in June, with airlines’ supply projections pointing to a reduction of 121 flights a day.
Sharper impact ahead
The issue featured prominently in conversations between airline executives and analysts during first-quarter earnings presentations. Because the conflict began on February 28, its impact on first-quarter numbers was more limited. The stronger effect, executives said, is expected in the second and third quarters.
One of the ways Azul has sought to navigate the crisis has been to reorganize its network. On May 7, executives at the carrier said the company would cut its planned seat supply for May and June by 5% because of higher jet fuel prices.
Azul Chief Executive Abhi Shah said the airline has focused on fine-tuning capacity, raising fares and prioritizing more profitable routes. “We will make more cuts as necessary. We have been very proactive,” he said. Even so, he noted that Brazil’s airline industry has been less aggressive in cutting capacity than carriers in other parts of the world.
On fares, Shah said the sector has been conservative but has moved ahead with repricing in response to the crisis. Since the war began on February 28, he said, nine price-adjustment campaigns have been carried out, compared with three in the same period last year. “Today, we are seeing 30% growth in the average fare for future bookings,” Shah said.
Seat-growth guidance
Latam told the market on May 6 that it was canceling its 2026 seat-supply projections because of the oil crisis. The company had previously targeted an 8% to 10% increase in seats globally this year.
Latam Brasil Chief Executive Jerome Cadier said the airline has so far been making targeted adjustments to flights. For June, the company reduced its expected supply for the month by about 3%. “We have to look not only at the price of fuel [in the future], but also at demand elasticity.”
The company had previously projected average jet fuel prices of around $90 a barrel. It now assumes prices of about $170 a barrel for the second and third quarters and $150 for the fourth quarter.
Higher fuel prices added $40 million to Latam’s costs in March alone. For the second quarter, the company estimates fuel spending will be $700 million above what had been expected.
As a result, Latam now expects adjusted EBITDA to be $400 million lower than the range previously projected. Its current forecast is for EBITDA between $3.8 billion and $4.20 billion, compared with the previous range of $4.2 billion to $4.6 billion.
Gol is also monitoring the issue. People familiar with the matter said the airline reduced its planned seat supply by about 6% in May and June because of the rise in oil prices. The company was contacted but did not comment. Gol delisted from the Brazilian stock exchange and is no longer required to disclose its results.
Abra, the holding company that controls Gol and Avianca, has also been following the issue closely. At its latest press conference, in late March, executives pointed to a hedging strategy designed to help the group navigate the start of the crisis with more flexibility. The group hedged 50% of its fuel consumption between March and May and raised the hedge to 40% through the end of August.
Tax incentives
On May 1, state-controlled oil company Petrobras raised jet fuel prices by 18%. It was the third consecutive increase for the fuel. In March, the adjustment was 9.4%. In April, the increase was even steeper, at 54%. Outside Brazil, jet fuel rose to about $4 a gallon from $2.
The crisis in Brazil, however, is different from other markets, where companies face the risk of fuel shortages. Petrobras produces locally about 90% of the jet fuel used by domestic airlines.
Even so, Abear has voiced concern over the federal government’s decision not to extend the exemption from PIS/Cofins social taxes levied on aviation fuel.
On May 13, the government announced new measures to contain increases in diesel and gasoline prices, but jet fuel was left out. If the current scenario remains unchanged, the tax benefits granted to the airline industry will expire on May 31.
In a statement, Petrobras said it will continue to offer the market the option of paying part of the adjustment in six installments, with the first payment due in August 2026.
However, the mechanism has not proved effective. People with knowledge of the situation said the rates charged were considered high, at about 16% a year, above the Selic, Brazil’s benchmark interest rate, now at 14.5%.
On the other side, sources said distributors have not engaged with the installment plan. That is because they would be responsible for paying Petrobras in the event of a default by any airline. As a result, in many cases, distributors began requiring guarantees before allowing installment payments.
Petrobras did not comment on the industry’s difficulties in accessing the installment plan.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/20/2026
ELEA SHAREHOLDERS BUY CELLERA FARMA, TARGET BRAZIL EXPANSION
Argentine pharmaceutical group acquires 90% stake in Brazilian company; Omilton Visconde Junior retains a 10% stake and remains CEO
Shareholders of Elea, one of Argentina’s largest pharmaceutical companies, finalized this week the acquisition of Cellera Farma, Brazil’s youngest domestically controlled drugmaker, marking their entry into the Brazilian market and the start of an expansion plan aimed at rapid growth in the country over the coming years.
At the same time, the Brazilian pharmaceutical company, whose portfolio includes brands such as Tylex, a painkiller, and Pamelor, an antidepressant, announced a distribution and commercialization agreement for two Sanofi drugs in the domestic market, a deal expected to add R$650 million in annual revenue.
Under the four-year agreement with the French pharmaceutical company, which includes an option to acquire the products, Cellera will double in size and increase its annual revenue to R$1.3 billion.
Cellera was founded in 2017 by businessman Omilton Visconde Junior, a well-known entrepreneur in Brazil’s pharmaceutical industry, alongside private equity firm Victoria Capital Partners.
The stake held by Victoria Capital, 79.9%, along with a 10% interest owned by Visconde Junior’s brother, were sold to Elea’s shareholders. The Brazilian executive will retain a 10% stake and remain chief executive officer, a position he has held since the company’s founding.
The value of the transaction, which has already been approved by Brazil’s antitrust regulator CADE, was not disclosed due to a confidentiality agreement among the parties. Industry sources consulted by Valor estimated, however, that Cellera’s valuation may have reached $300 million when factoring in the Sanofi agreement.
At least two Elea executives, Mathias Sielecki, a shareholder and member of one of the families controlling the Argentine group, and Mariano Foglia, are relocating to Brazil and will join Cellera’s management team as part of efforts to accelerate the company’s growth in the country.
“Elea is a market leader in Argentina and operates in several international markets. Entering Brazil had been an ambition for many years. It is the largest market in the region, with highly competitive and capable companies. We believe that, with our products, we can expand Cellera’s portfolio and also bring a development-oriented approach,” Daniel Sielecki, director and shareholder of the Argentine pharmaceutical company, told Valor.
According to Sielecki, the company recognizes that Brazil’s pharmaceutical market is defined by intense competition, but Elea, which posts annual sales of between $700 million and $800 million, has already dealt with similar challenges. Beyond its investments in the pharmaceutical industry, both inside and outside Argentina, the Sielecki family also has businesses in sectors including oil and gas, petrochemicals and natural gas transportation through TGS.
In addition to the size of the Brazilian market, Sielecki said the continued involvement of Visconde Junior and his experience in the local pharmaceutical industry would be key to executing the company’s growth strategy.
“Our plan is to develop new products and introduce molecules that are not yet available in Brazil. We will assess the Brazilian market and determine exactly which technologies we want to bring here,” he said.
Visconde Junior said that initially, Cellera’s strategy focused on acquiring mature drugs that no longer received significant investment from their original pharmaceutical owners and slowing or stabilizing declining sales trends.
With the Sanofi agreement, however, the company faces a new challenge: Puran, a hormone replacement therapy drug, and Zinpass, used to control cholesterol, are still growing. Puran is the market leader in its segment, with a 50% market share, while Zinpass ranks second in its category, according to Cellera’s CEO.
“It is a different level of competition. Cellera doubled in size in 2019, when it completed major acquisitions, and now it is doubling again,” said Visconde Junior. “The agreement with Elea also creates the possibility of significantly expanding the portfolio and increasing our bargaining power for licensing deals in the most relevant markets,” he added. According to him, an additional R$500 million in revenue is already in the company’s medium-term business pipeline.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/21/2026
FEDERAL POLICE REJECT MASTER OWNER PLEA DEAL PROPOSAL
Investigators say Daniel Vorcaro failed to provide new evidence that would justify benefits such as release from jail
Brazil’s Federal Police rejected on Wednesday (20) the plea bargain proposal submitted by former banker Daniel Vorcaro, owner of Banco Master. Valor learned that investigators believe the probes are already advanced and that he did not provide new evidence that would justify granting benefits, such as release from jail.
A police chief familiar with the negotiations said the decision shows the Federal Police is acting on technical grounds. “If there is content, under the terms of the law, we move forward; if there isn’t, we reject it,” he said.
The same person said the rejection also shows that the Federal Police “does not force anyone to cooperate, does not impose conditions that are not in the law, and does not suggest names to be ‘handed over.’”
Frustration with proposal
Investigators had already been signaling dissatisfaction since the so-called annexes were submitted to the Federal Police and the Prosecutor General’s Office, which is also reviewing the proposal.
One sign of that frustration came on Monday (18), when the former banker was transferred to a smaller cell at the Federal Police headquarters in Brasília. Vorcaro had left the Papuda Penitentiary Complex in mid-March, after it was agreed that he would begin talks aimed at reaching a plea deal.
On Monday, however, Vorcaro left a 12-square-meter room with air conditioning, a minibar, and a private bathroom, and was moved to one of the cells used for pretrial detainees, a smaller and simpler space than the one he had occupied before, which had been adapted to receive former President Jair Bolsonaro.
Vorcaro was placed in preventive detention during the third phase of Operation Compliance Zero, launched on March 4. He later changed his defense team and began negotiating a plea deal. Criminal lawyer José Luís Oliveira Lima was brought in to handle the talks. Contacted by Valor on Wednesday, he did not comment.
Since the start of the investigations, the Federal Police’s position was that a plea deal would be viable only if the former banker provided relevant information implicating people “higher up” who were also involved in the multibillion-real frauds.
Investigators concluded that this did not happen. Recently, for example, the Federal Police launched an operation targeting Senator Ciro Nogueira (Progressive Party, Piauí). He, however, was not mentioned in the annexes submitted by Vorcaro.
According to the investigation, the president of the Progressive Party received a kind of monthly allowance from the banker at the time to represent his interests in Congress, an allegation Nogueira denies.
In that context, the lawmaker allegedly introduced an amendment to a bill to raise the guarantee limit of the Credit Guarantee Fund (FGC) to R$1 million per depositor, from R$250,000.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/21/2026
LARGER BRAZIL COFFEE CROP FAILS TO EASE PRICE UNCERTAINTY
Analysts say stronger production is still insufficient to relieve tight global supply and demand conditions
Brazil’s coffee crop is expected to grow this year, but not enough to ease tight global supply and demand conditions. That was the assessment of industry participants gathered Wednesday (20) at the International Coffee Seminar in Santos, São Paulo.
“We are living through a highly uncertain scenario in which it is impossible to map out any outlook. And this is happening amid climate change and a geopolitical crisis,” said Celso Vegro, a researcher at the Instituto de Economia Agrícola de São Paulo (IEA), on the sidelines of the event.
Companhia Nacional de Abastecimento (Conab) is set to update its estimates for Brazil’s coffee production on Thursday. In its previous forecast, the agency projected a harvest of 66.1 million bags, up 17.1% from 2025.
Private consultancies are pointing to even higher production, potentially surpassing 70 million bags. Expectations of a robust crop are seen as a factor weighing on prices in international commodity exchanges.
On the New York exchange, the July arabica coffee contract closed down 0.68% on Wednesday at $2.6830 per pound. Over the past week, the contract fell 4.42%, according to Valor Data. Over one month, prices declined 6.74%.
In the view of Carlos Augusto Rodrigues de Melo, president of Cooxupé, “Brazil needs to produce 70 million bags, otherwise we will lose market share.” “We expect a good crop both in quality and quantity,” he added in an interview during the International Coffee Seminar.
Melo said current prices remain at good levels, although highly volatile. According to him, there is little coffee available in the market, leaving room for speculation.
Within the coffee industry, the watchword is caution, said Pavel Cardoso, president of ABIC, the Brazilian Coffee Industry Association. He said companies have passed part of the recent price declines on to retailers, but volatility is creating “tension” between buyers and sellers.
“If companies build long inventory positions and prices fall, margins are hurt. If they keep inventories short and prices rise, they are left uncovered. And there is also concern over El Niño. The 2026 crop is potentially the first opportunity to rebuild inventories,” he said.
Vinicius Estrela, from the Brazilian Specialty Coffee Association (BSCA), reinforced those concerns. “Coffee is a long-term crop, and we are having to make short-term decisions with higher costs and uncertainty over commercialization.”
Despite expectations of larger supply in Brazil, Eduardo Carvalhaes, from Escritório Carvalhaes, said he still sees little room, at least for now, for a significant drop in prices.
“In the minds of major buyers, coffee prices will keep falling because the crop will be large. Yet even after all this decline, prices are still at $2.70 [in New York]. [But] the balance between production and consumption is fragile and there are no inventories,” he said on the sidelines of the event.
For IEA’s Vegro, the arrival of the new crop on the market may put pressure on prices, but only in the short term. “Consumption has grown so much, while supply has been constrained, that larger supply now does not offset this imbalance. And logistics costs will eat into part of profitability,” the researcher added.
Last year, coffee exporters incurred an additional R$66.1 million in costs due to inefficiencies at ports, according to calculations by the Conselho dos Exportadores de Café do Brasil (Cecafé). For Eduardo Heron, technical director at Cecafé, concerns for this year are increasing.
“In the second half, with a large volume to ship and the same infrastructure, losses could be even greater,” Heron said. He added that the war in the Middle East and the closure of the Strait of Hormuz are risk factors for the entire supply chain, as they create disruptions to foreign trade.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/22/2026
TAX OVERHAUL CLOUDS OUTLOOK FOR INFRASTRUCTURE CONCESSIONS
Companies warn delayed compensation rules could strain cash flow and disrupt operations from sanitation to highways
Brazil’s infrastructure market sees a high risk of delays in adapting to the tax reform, which begins to take effect in 2027. Companies are already preparing a wave of requests to rebalance contracts, but there are concerns that delays could hurt concessionaires’ cash flow and, in some cases, make operations unviable in segments that currently do not even issue invoices.
Concerns about the tax changes are not limited to infrastructure. But unlike other sectors, concessionaires are not free to adjust prices and pass on cost increases, said tax lawyer Jorge Lopes, a partner at Pinheiro Neto Advogados. “It is a sector of long-term contracts. Other sectors have more freedom to react quickly to impacts,” he said.
Sanitation companies are in the most dramatic situation, according to companies and tax lawyers. The sector, which does not pay municipal and state taxes, was left out of the exemption list in the reform. Abcon, the association representing private sanitation companies, estimates that the average impact on tariffs could reach 18%, considering that the tax rate would rise from the current level of as much as 9.25% to 26.5%, according to preliminary calculations.
The law recognizes that infrastructure concessionaires have the right to compensation for tax increases, through tariff increases, for example. However, calculating and applying that compensation is often difficult and slow.
In sanitation, companies have not even reached the stage of discussing contract rebalancing because they are still in an earlier, more bureaucratic phase: understanding how invoices will be issued for taxes from which they are currently exempt, said Abcon president, Christianne Dias.
“There is a working group with the Federal Revenue Service, but the rule is not ready. There is a lot of anxiety among members. In January 2027, companies will start facing fines, and no one knows yet what the system will look like,” she said.
Worse than the fines, there is a risk that companies’ operations could be halted without this system, said André Menon, a tax partner at law firm Machado Meyer. “Because of the validation rules, which are the minimum information required for a tax document to be issued, the taxpayer cannot even operate. The company would not be able to bill for water, for example.”
Asked about the issue, the Federal Revenue Service said there are “no more uncertainties,” since the manuals on water and sanitation invoices were published in April. Abcon, however, said it is still waiting for a guide with the clarifications companies need to develop their systems, and that the outlook remains unclear.
Once that stage is cleared, sanitation companies will still have to deal with contract rebalancing, another issue that is more complex in the sector because of the large number of regulatory agencies. “There are 110 agencies, so standardizing the methodology is very difficult,” Dias said.
Abcon believes the solution will be to negotiate a reference rule with ANA, the National Water and Sanitation Agency, which sets the parameters that local agencies must follow. So far, however, talks with the federal agency have not advanced. Outside that framework, rebalancing itself can only be granted by the local authority. “The risk is that the sector will grind to a halt and investment will be frozen,” Dias said. ANA declined to comment.
Preventive rebalancing
For highways, talks with the largest agencies, ANTT, the National Land Transportation Agency, and Artesp, the São Paulo State Transportation Agency, are already underway, but regulators have not yet put forward a concrete proposal.
“The main concern is to give momentum to the issue with a view to concluding it still in 2026, so that 2027 begins with the [contract rebalancing calculation] methodology in place and concessionaires do not face a cash-flow mismatch,” said Marco Aurélio Barcelos, president of the Brazilian Association of Highway Concessionaires (ABCR).
He said it is difficult to quantify the average impact of the reform because it varies greatly from case to case. In more recent contracts, where there are still more works to be carried out, the effect is smaller, since taxes can be offset with credits generated by investments. More mature projects, where works have already been delivered, are more affected.
ABCR’s proposal is to work with annual precautionary rebalancing, anticipating the effects, instead of waiting for the impacts to occur and only then filing rebalancing requests, as usually happens. “The idea is to project the impacts of the reform for 2027 at the end of 2026 and already carry out a rebalancing. At the end of the year, we will have the actual information on the impact and, with that, make the adjustment.”
ABCR argues that this should be done every year, always with advance compensation for the following year, along with an assessment of the previous year, supported by independent verifiers.
Sector agencies still do not have a proposal, but there are signs that the precautionary rebalancing model could be adopted in the case of the tax reform.
ANTT Director General Guilherme Sampaio said in a statement that the possibility of precautionary and evidence-based rebalancing is being considered. “At this moment, however, there is still no definitive methodology approved by ANTT,” he said. Sampaio noted that he understands companies’ concerns and stressed that ANTT should address the issue “as quickly as possible, without compromising technical consistency and legal certainty.”
Artesp said it is preparing a methodology “based on objective technical criteria, taking into account the specific characteristics of each concession.”
Risk matrix
The National Civil Aviation Agency (Anac), which regulates airports, said it has a working group with companies to discuss the methodology for calculating the impacts. The National Waterway Transportation Agency (Antaq), which oversees ports, said that “any requests must demonstrate the causal link, the materiality of the impact and its adherence to the risk matrix.”
The Federal Revenue Service noted that the law gives regulatory agencies 90 days to respond to rebalancing requests, with a one-time extension of another 90 days.
Despite concerns over the start of implementation, Pinheiro Neto’s Lopes said the reform will be phased in.
In 2027, Contribution on Goods and Services (CBS) will take effect, replacing federal taxes. Starting in 2029, the transition to Tax on Goods and Services (IBS), which will replace state and municipal taxes, will begin. A testing phase is already starting this year.
Lopes also said segments such as energy and telecommunications, which already face high tax rates, should feel less of an impact.
The infrastructure segment that will benefit the most is public transportation, which will be exempt.
Even in that sector, however, there are doubts. For example, in the case of subway operators, it is not clear what treatment will apply to subcontracting in operations and maintenance, which is common, Machado Meyer’s Menon said.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/26/2026
REGULATION AND SCALE CHALLENGE STARTUPS
Transition to midsize status can take up to eight years, depending on sector and capital runway
In 2011, when Carime Vitória da Silva Rodrigues applied for an undergraduate research scholarship at the Chemistry Institute of the University of Brasília (UnB), she did not imagine that her nanotechnology research would become the seed of a startup. Founded in 2019 within UnB’s Technological Development Support Center by Rodrigues and professor Marcelo Oliveira, Krilltech Nanotecnologia Agro began operations with a single product, derived from the application of carbon nanoparticles to enhance plant metabolism. Today, the company has filed a patent in Brazil, has five products in its portfolio, and expects to generate around R$15 million in revenue in 2026.
Marcelo Oliveira, who holds a PhD in inorganic chemistry and is a professor at UnB, says that, unlike other deep tech startups—those that innovate based on scientific research—Krilltech grew by overcoming regulatory barriers. Another differentiator is its care in obtaining licenses. Krilltech’s products are liquid solutions containing spherical carbon nanoparticles, each approximately 56.5 million times smaller than a soccer ball, and are applied to plants or soil. The technology improves plant development, making it more efficient and healthier.
“The biggest challenge for deep techs, in any segment, is overcoming regulatory barriers, especially in sectors where these requirements are very high, particularly in obtaining licenses,” says Oliveira, who is also Krilltech’s CEO.
The maturity level of an innovation before it can be considered operational in a commercial environment is measured by the Technology Readiness Level (TRL) model, which has 9 levels. In Oliveira’s view, the most critical period for a startup is reaching TRL stages 7, 8, and 9, when products need to pass commercial-scale tests.
Based in a 1,200-square-meter plant in Brasília, Krilltech began exporting its products to the European Union, Peru, and Uruguay in 2025. In late April this year, the company was one of six selected for the Al Miyah challenge, held in the United Arab Emirates to address agricultural water scarcity. Krilltech competed against 846 teams from 54 countries, and the challenge winner will be announced at the end of this year.
Commercial production, which began in 2021, gained scale after Krilltech signed a marketing agreement with Casa Bugre in December 2022. A distributor of high-performance agricultural inputs in Brazil’s agribusiness market for more than four decades, Casa Bugre invested R$7 million in Krilltech in 2024.
“Our production in 2025 was 30 times higher than in 2021, when we were a startup. We expect to grow 26% this year,” says Carime Rodrigues, who holds a PhD in chemistry from UnB and is Krilltech’s research and development director.
Overcoming regulatory barriers also challenges those developing innovations in finance. This scenario led to the creation of Pinheiro Neto’s Legal Acceleration Program for Startups, which is marking 10 years of operations. Coordinated by lawyer Bruno Balduccini, a partner at Pinheiro Neto, the program has advised 46 startups—17 of which raised financing or put their businesses on investors’ radar for a sale. Companies such as Pier Seguradora and corporate benefits company Caju have gone through the program.
Balduccini notes that the maturation period for a startup to reach annual revenue above R$20 million can take up to eight years. This period varies depending on the sector, capital runway, and the company’s execution capacity. “B2B software companies, fintechs, and SaaS [software as a service] companies usually manage to reach scale more quickly because of recurring revenue and greater operational scalability. More regulated sectors or those intensive in physical operations—such as logistics, healthcare, and climate tech—tend to require longer cycles,” he says.
The lawyer noticed that innovative companies in segments such as finance and insurance struggled to comply with regulations without legal support. “The program advises those with a good idea who can’t afford our hourly rates. Payment happens when the startup raises funds; we receive part of what it raises in cash,” he explains.
One successful case in Pinheiro Neto’s program is Exato Digital, a technology company that conducts background checks on individuals and companies. The startup emerged from a software consulting firm founded by André Takitani Pires and Leandro Villani Cambraia Casella, technology professionals and friends from their time at Professor Camargo Aranha State Technical School in Mooca in the late 1990s.
Exato was founded in 2019 in response to demand from consulting clients for an automated service to verify documents, certifications, and certificates. The partners realized they had a product with potential to scale and that worked very well from a technological standpoint. However, with the enactment of the General Personal Data Protection Act (Law 13709 of August 14, 2018), known as LGPD, Exato needed to invest in legal advice.
“At the time, we didn’t have the budget to hire a firm the size of Pinheiro Neto. The program fit like a glove because we could pay with part of the investment that would still be raised,” Casella says.
With its participation in the law firm’s program, which began in 2020, Exato attracted clients such as Bradesco, which became one of the startup’s investors. In April, the company’s revenue totaled R$2.5 million. The projection is to end December this year with monthly revenue of R$5 million. Exato’s client portfolio includes companies such as Uber, Bradesco, Stone, JBS, Fleury, Habib’s, McDonald’s, Banco BMG, Drogaria São Paulo, and Espaçolaser.
In the last quarter of 2025, Exato raised R$20 million in a Series A round led by Quartzo Capital and Bradesco. Casella says the company has reached break-even and can reinvest its revenue. “We have been growing at break-even; we are no longer in the red, which is excellent for this moment because the venture capital market depends heavily on interest-rate behavior,” Casella says.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/26/2026
BLACK PROFESSIONALS MAKE UP 13.4% OF LAWYERS AT BRAZIL’S LARGEST FIRMS
This figure comes from the latest census by the Legal Alliance for Racial Equity, slated for release on Thursday (21)
The proportion of Black professionals at Brazil’s largest law firms has increased over the past eight years. From a virtually nonexistent share in 2018, it rose to 11.3% in 2021 and reached 13.4% in 2025, according to data from the latest census by the Legal Alliance for Racial Equity, to be released today.
The Alliance currently brings together 14 law firms. The census, however, was conducted at 10 of them, covering a total of 7,486 employees in legal and administrative departments. Because participation is voluntary, about 54% of workers responded to the survey. The results showed progress, but there is still room for improvement, according to specialists.
Created in 2017, the Alliance brings together firms that have already implemented inclusion and retention programs focused on racial diversity. The initiatives include strategies to increase the hiring of Black candidates, offer training programs, and improve the retention and promotion of professionals.
This year, the Alliance is being chaired by a Black lawyer for the first time. Robson de Oliveira, a partner at Demarest Advogados, says that after an initial phase of awareness-raising and a focus on hiring, the plan for the coming years is to find ways to increase the retention of Black talent at law firms.
“The survey is a diagnosis that helped us realize that talent retention is one of the biggest bottlenecks for expanding diversity. Although some turnover is normal and even desirable, as firms train professionals, they begin to draw more attention from the market,” he says.
Among the training activities, the law firms that are part of the Alliance offer, for example, English courses and mentoring, helping prepare résumés that highlight experience and offering guidance on networking, among other topics. “Many times, the professionals served are the first generation with a college degree, so they don’t have family guidance on these things,” says Robson de Oliveira.
Barbara Rosenberg, a partner at BMA and an Alliance adviser, adds that the Quota Law (Law 12711 of 2012) helped Black students gain the opportunity to stand out academically, but the next step was still missing. “The greatest difficulty was getting these excellent students, from excellent universities, to Faria Lima,” she says.
And when Black students and recent graduates arrive at large law firms, they bring skills and abilities that set them apart from other candidates, according to Renata Scuba, of Mattos Filho. “Behavioral skills, commitment, resilience, and a drive that is hard to see in those who already come from a background full of opportunities,” she says.
According to her, this is also why it is so important to ensure racial literacy within law firms, alongside professional training, so that leaders in decision-making positions recognize these differentiators. Robson de Oliveira agrees: “We need to accelerate change from the top down.”
As for the next challenges, the lawyer adds, the greatest will be not losing the ground already gained—in addition to advancing in hiring and retaining professionals. The presence of Black professionals in director-level positions, for example, rose from 5.6% to 7.8% between the previous census and this one.
Luiza Sato, a partner at TozziniFreire, points out that the Alliance prioritizes an intersectional approach to addressing these difficulties. “When we cross-check the data, Black women in leadership positions are practically nonexistent,” she says.
Lawyer Isadora Almeida, who joined Demarest in 2019, three years after graduating from PUC, to work in capital markets, is one of the beneficiaries of the Alliance’s initiatives. When she became a senior lawyer in 2023, she expressed a desire to take an international course. She was accepted by several universities with scholarships and chose the University of Pennsylvania, where she received a 60% scholarship. The remainder, as well as housing and tuition expenses, was paid by Demarest through its internal D Raízes program.
Even in a Master of Laws (LLM) program—an advanced graduate law degree aimed at the international community, with students from more than 40 nationalities—Isadora studied with only three other Black students. “It was just three African students and me in my year,” she says. After the course, she also spent a year working at a U.S. firm as an international lawyer.
She says the opportunity was very important for her career. “The LLM is already a very good course for opening minds, very strong in networking and preparation for cross-border work. For those who work with transnational law, it is a more important experience than any academic one; it opens opportunities for attracting clients,” she explains. She currently sits on the board of the D Raízes program.
According to Robson de Oliveira, the Legal Alliance for Racial Equity’s current focus is on maintaining awareness-raising events. Earlier this month, the initiative brought two judges to speak to lawyers at the firms about the application of the National Council of Justice’s (CNJ) Racial Protocol. Topics such as algorithmic discrimination and racial biases in artificial intelligence have already been addressed. The next event, with no theme defined yet, is expected to take place in late June.
The firms that took part in the survey were BMA, Demarest, Lefosse, Lobo de Rizzo, Mattos Filho, Pinheiro Neto, Stocche Forbes, TozziniFreire, Trench Rossi Watanabe, and Veirano.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
Government likely to unveil diesel subsidy next week
Finance minister told Valor subsidy could reach R$0.35 per liter, depending on oil price fluctuations in coming days
05/27/2026
Finance Minister Dario Durigan said on Wednesday (27) in an exclusive interview with Valor that he is working under the assumption that the government will subsidize diesel next week, as the current exemption on federal fuel taxes is set to expire on Sunday (31). He said the subsidy could reach R$0.35 per liter, depending on fluctuations in Brent crude prices over the coming days.
“Today, I am working with the idea of maintaining the current subsidy at R$0.35, but that still needs to be assessed,” he said. “Every day matters because [Brent prices] have been highly volatile, and we need to calibrate the measure, including to protect fiscal accounts,” he added.
The diesel subsidy will be necessary because the complementary bill that would allow the government to grant tax exemptions on fuels has not yet been approved by Congress.
Durigan stressed that the government will not use the additional revenue generated by oil prices to improve fiscal results. The goal, he said, is to mitigate the effects of the war on the population and economic sectors.
“My role here is not just about fiscal policy. Of course, that is my primary role—to take care of the country’s fiscal situation—but not only that. I also need to ensure the country appears in the UNDP [United Nations Development Programme] report, as happened yesterday [Tuesday] for the first time, reaching the level of very high human development, which involves longevity, education, and income.”
On Monday, the UNDP announced that Brazil had reached the category of very high human development for the first time in history, with an index of 0.805 in 2024.
In the interview with Valor, the minister also said the Finance Ministry is working on a proposal to raise the revenue ceiling for qualification as an Individual Microentrepreneur (MEI), in line with an agreement reached between the federal government and the Chamber of Deputies. The adjustment would apply only to MEIs, not to companies under the Simples Nacional tax regime. As a result, the fiscal impact would remain below R$10 billion, according to Durigan.
“We will implement this [increase in the MEI ceiling] gradually. I still don’t know whether it will happen in 2027 or 2028, but probably along those lines,” he said. Currently, the annual revenue ceiling for MEIs is R$81,000.
According to the minister, the proposal would also allow MEIs to hire two employees instead of only one, as currently permitted. In addition, he said he would like to use the bill to correct other distortions, such as requiring small companies that hire more than five MEIs to contribute to the social security system.
“It’s something I can take to Speaker Hugo,” he said, referring to Brazil’s Lower House speaker, Hugo Motta.
The bill currently under discussion in the Chamber, already approved by the Senate, is broader and includes adjustments for individual microentrepreneurs, microenterprises, and small businesses. According to estimates by the economic team, the proposal would have a fiscal impact of R$48.5 billion in 2027 and R$53.7 billion in 2028.
Source: Valor International
https://valorinternational.globo.com/
_____________________________________
05/29/2026
U.S. TO LABEL BRAZIL’S PCC, CV AS TERRORIST GROUPS
Designation raises concerns in Brasília over possible U.S. interference and implications for banks and companies
The U.S. government said Thursday (28) that it will designate the criminal factions Comando Vermelho (CV, or Red Command) and Primeiro Comando da Capital (PCC, or First Capital Command) as Specially Designated Global Terrorists (SDGTs). The U.S. State Department said the designation will take effect on June 5.
The announcement came two days after Senator Flávio Bolsonaro (Liberal Party, Rio de Janeiro), a presidential hopeful, visited U.S. President Donald Trump in Washington, D.C.. After leaving the meeting, Flávio said he had urged the U.S. government to classify the factions as foreign terrorist organizations. Shortly after the statement was released, the senator noted the decision on social media and wrote: “Great day,” the same expression used by his father, former President Jair Bolsonaro (Liberal Party).
The measure follows Trump’s earlier designation of several criminal groups from Mexico and other countries as terrorist organizations.
The Brazilian government is concerned about the move. It fears the designation could open the door to U.S. interference on Brazilian soil.
Celso Amorim, President Luiz Inácio Lula da Silva’s special adviser for international affairs, told G1 on Thursday night that organized crime must be fought, but security is a national matter: “Public security is a fundamental issue for socioeconomic development. Organized crime is an evil that must be fought. International cooperation is welcome, especially on issues such as money laundering and arms smuggling. A pretext for intervention is unacceptable,” Amorim said.
President Lula visited the White House earlier this month in an effort to prevent what Brazil sees as a counterproductive measure that would pose risks both to its financial system and to its sovereignty. Instead, the Brazilian president sought to persuade Trump to deepen U.S. cooperation with his government’s efforts to fight groups such as the PCC, targeting money-laundering operations and smuggling networks.
‘Regional threat’
In the statement, U.S. Secretary of State Marco Rubio said the PCC and CV are two of Brazil’s most violent organizations and that, together, they “command thousands of members and orchestrate brutal attacks” against civilians, police officers, and authorities. “Their influence and illicit networks extend far beyond Brazil’s borders, across our region and into our country,” the statement said.
Rubio said the Trump administration will use all available tools to safeguard U.S. security interests and disrupt “the revenue streams funding violent narco-terrorists.” “Today’s action taken by the State Department further demonstrates the Trump Administration’s unwavering commitment to dismantling cartels and criminal organizations in our region and ensuring the safety of the American people. ”
The U.S. measure is also expected to create uncertainty across the financial and economic system as banks and other companies seek to understand its implications. Last year, the U.S. targeted three Mexican banks over possible money laundering tied to drug trafficking, effectively cutting them off from the U.S. financial system. In recent years, Brazilian authorities have said they found evidence that the PCC launders money through fintechs.
(With Bloomberg)
Source: Valor International
_____________________________________
05/29/2026
PETROBRAS BOOSTS GASOLINE PRICES AS SUBSIDY BLUNTS CONSUMER IMPACT
Analysts differ on whether government support will hold down pump prices
One week after joining the federal government’s latest fuel-subsidy program, Petrobras raised gasoline prices at its refineries on Thursday. The state-run oil company announced a R$0.48-per-liter increase effective Friday, equivalent to 18.68%.
The impact on fuel distributors, however, will be limited to R$0.04 per liter, or 1.56%, because Petrobras agreed to receive a government subsidy of R$0.44 per liter of gasoline. Specialists disagree on how much the measure will ultimately affect consumer prices.
The last time Petrobras raised gasoline prices at its refineries was on July 8, 2024, when it increased them by 7.12%. In January, the company reduced gasoline prices by 5.17%. “The effect on distributors and final consumers is mitigated by the economic subsidy granted by the government,” Petrobras said in a statement.
Petrobras Chief Executive Magda Chambriard attended a press conference on Wednesday regarding investments in the northeastern state of Sergipe, but did not comment on the price adjustment.
Petrobras has been selling fuel below international prices, arguing that it does not pass through short-term market volatility such as that caused by the conflict involving the United States, Israel, and Iran.
Even after Thursday’s increase—including the subsidy amount—the company continues to sell gasoline below international parity levels.
According to data from the consultancy StoneX, Petrobras gasoline is 35.2% below international prices, equivalent to roughly a R$ 0.90-per-liter gap. Without the latest adjustment, that gap would have reached R$1.38 per liter.
The subsidy is part of a government package to soften the impact of tensions in the Middle East on fuel prices in Brazil. The measure was established through a provisional presidential decree issued on May 13, capping gasoline and diesel prices sold by refineries and importers at R$0.89 per liter above the subsidized benchmark.
Fuel distributors and retailers are not eligible for the subsidy unless they hold authorization to import refined products directly or through affiliated trading operations. Market specialists remain divided over whether the subsidy will effectively limit pump prices.
David Zylbersztajn, a former director-general of Brazil’s National Petroleum Agency and professor at the Pontifical Catholic University of Rio de Janeiro, said the government’s objective of avoiding larger pass-throughs to consumers is likely to succeed during this first Petrobras adjustment since the conflict escalated.
“In theory, prices are free, but the impact at the pump should be minimal. There is no reason for the subsidy not to work in cushioning the effect on final prices,” said Zylbersztajn, who also chairs the board of Sindicom, an association representing Brazil’s largest fuel distributors.
In his view, the effect on consumers should be close to the R$0.04-per-liter increase charged by Petrobras to distributors. He noted that the post-subsidy adjustment is very small relative to the retail price of gasoline.
According to a survey by Brazil’s National Petroleum Agency, average gasoline prices at service stations last week stood at R$6.62 per liter. A R$0.04 increase represents slightly more than 0.6% of that average. “Petrobras is selling with a R$0.04 increase. It is negligible,” Zylbersztajn said.
Others in the industry are less convinced.
James Thorp Neto, president of the National Federation of Fuel and Lubricant Commerce, said the market is too dynamic to isolate the subsidy’s effect accurately. As examples, he cited falling prices for ethanol and biodiesel, both of which also influence final fuel prices. “There are so many factors affecting prices that it becomes difficult to know exactly what causes them to rise or fall,” Thorp said.
Another industry source noted that retail prices ultimately depend on competitive market conditions and distributors’ commercial strategies. Bruno Cordeiro, a market-intelligence analyst at StoneX, said imported fuel prices have recently declined because crude oil prices eased amid growing optimism about extended peace negotiations between the United States and Iran.
However, he noted that U.S. gasoline inventories have fallen due to stronger refining margins and the approach of the American summer driving season, which typically boosts fuel consumption. “We are seeing a gasoline-crude crack spread of about $40 per barrel,” Cordeiro said. “If there is no agreement between the U.S. and Iran to restore flows through the Strait of Hormuz in the coming days, we could see additional upward pressure.”
Source: Valor International
https://valorinternational.globo.com/
_