09/12/2025

The Ministry of Finance’s main proposal for COP30, to be held in Belém in November, is the creation of a coalition of countries willing to integrate their carbon markets. The alliance would operate with a shared carbon emissions cap among participants, which would be progressively reduced to encourage the decarbonization of economies. It would include fairness criteria for poorer nations and establish a permanent mechanism for channeling resources to help them adapt to climate impacts. The idea has been discussed with the European Union, China, and other countries and could become one of the major outcomes of COP30.

“We believe the proposal is effective because it establishes an emissions cap; fair, because it takes per capita income criteria into account; and politically viable, because it does not require agreement among 200 countries to move forward. All that is needed is a coalition strong enough to make it happen,” says Rafael Dubeux, deputy executive secretary of the Ministry of Finance. “If it manages to bring together Brazil, the European Union, and China, it may encourage others to join.”

The Ministry of Finance has been developing the proposal internally and in coordination with other ministries. Mr. Dubeux was invited to present the idea to a group of economists led by Brazilian José Scheinkman, who was asked to form a team to advise COP30 President André Corrêa do Lago. “We had a conversation with Scheinkman and other economists, such as MIT professor Catherine Wolfram.” Ms. Wolfram leads a group studying how to make the coalition feasible and includes several Brazilian economists.

The Brazilian government and the ministry headed by Fernando Haddad hope the proposal will gain traction in Belém. “We expect to have a joint declaration from countries at COP30 to establish the coalition,” says Mr. Dubeux. In a recent tweet, European Commission President Ursula von der Leyen expressed support for COP30 in Belém, writing: “With Brazil’s leadership in carbon markets, we must make Belém a true milestone for the planet.”

Below are the main points from Mr. Dubeux’s interview with Valor, in which he explains the proposal in detail:

Day 1

On his first day in office, Minister Fernando Haddad asked me to begin working with the ministry team on what would later become the Ecological Transformation Plan. The goal was to reorient the Brazilian economy toward a low-carbon model that is more distributive and driven by technological innovation. It is worth noting that finance ministers typically take office facing a series of fiscal emergencies, and long-term strategic planning is rarely a priority at the outset.

We launched a collective effort involving teams from the Ministry of Finance, the Internal Revenue Service, the Economic Policy Secretariat, the Economic Reform Secretariat, and the ministries of Environment, Mines and Energy, and Trade, Industry, and Services. We structured the agenda around three main objectives: innovation, sustainability, and income distribution.

The Ministry of Finance’s role

The Ministry of Finance’s core responsibilities include managing GDP, inflation, unemployment, and other macroeconomic indicators, as well as improving the business environment for investment through tax, insurance, and credit reform. These initiatives form the prerequisites for development. But they are not enough.

Minister Haddad argues that, in addition to ensuring macroeconomic balance and improving the business environment, the Ministry of Finance and the government must open a third front: developing a long-term strategy for a growth model that replaces a reliance on exporting commodities without added value with one rooted in innovation; that decouples GDP growth from environmental degradation; and that distributes income more equitably, in light of Brazil’s history of profound inequality.

Brazil holds historical legitimacy on this agenda. It hosted the 1992 Rio Summit, has a power generation mix primarily based on hydroelectricity, has used ethanol on a large scale since the 1970s, possesses the world’s richest biodiversity, has invested heavily in renewable energy, and has combined economic and climate policy initiatives.

Socio-environmental reglobalization

By early 2024, we were already discussing what proposals Brazil, as host of the G20 and COP30, could present to help shape a financial architecture capable of steering global economic growth toward a low-carbon model. We have a role to play in this debate.

The minister argues that while globalization in recent decades has brought economic efficiency to certain value chains, the time has come for “socio-environmental reglobalization.” This means adding a new layer to international governance so that, alongside economic efficiency, global integration also incorporates social and environmental considerations. The goal is not to dismantle globalization, but to create a new model of productive integration that fully accounts for these elements.

Fund for tropical forests

As we prepared proposals for COP, we realized that, alongside the key topics already under discussion—such as NDCs (countries’ climate commitments), adaptation, and climate justice—there was a gap. What was missing was a proposal with a stronger economic focus at the heart of the climate challenge.

We had already developed a proposal with the Ministry of the Environment for the Tropical Forest Forever Facility (TFFF), a fund for tropical forests being launched by Brazil. If successful, it will become one of the most significant contributions of the COP30 process. Concrete in its design, it aims to generate a permanent flow of billions of dollars for developing countries that preserve tropical forests—a fund even larger than the resources of many multilateral banks.

The TFFF is set to become one of the largest global funds ever created. Our goal is for implementation to begin at COP30, with initial contributions coming from sovereign wealth funds, governments, central bank reserves, and philanthropic organizations. Yet, as crucial as the TFFF may be, it does not directly tackle the core issue of climate change: greenhouse gas emissions.

Unrealistic expectations

Some observers, in my view, hold unrealistic expectations that the “transition away” from fossil fuels approved at COP28 will prompt some countries to announce they will stop using or producing oil by 2030 or 2040. I do not believe that will happen.

What we can do is create mechanisms that enable an orderly phase-out of fossil fuels. This can occur once regulatory and financial frameworks induce the transition, either because low-carbon alternatives become more competitive or because continuing to exploit oil under current conditions becomes prohibitively expensive through carbon pricing or other regulations.

Four criteria

In the debate over decarbonization, four main criteria typically emerge. First, which producers face the highest and lowest costs? Those with the highest costs would likely be the first to halt production. Second, which producers have the highest and lowest carbon intensity per barrel? Third, per capita income: it makes sense for wealthy nations to cut emissions before poorer ones. Why should Nigeria stop producing oil while Canada continues to do so? That would not be fair. Fourth, energy security: countries must also weigh the stability of their energy supplies when planning emission reductions.

A global emissions cap

Given these criteria, how can we design an organized transition that reduces emissions quickly while ensuring fairness and equity? At the Ministry of Finance, in collaboration with the Ministry of the Environment, we developed the idea of creating a global emissions cap—one that would decline over time. Setting such a limit for the economy is fundamental to a regulated carbon market.

Market integration

Any activity that generates emissions would need to purchase allowances under this cap. As the cap decreases over time, the cost of these allowances would rise, creating a financial incentive for companies to decarbonize. We would start with a cap close to current emission levels and, ideally, reach net-zero emissions by 2050.

The most effective way to tackle climate change globally would be through a carbon price established by this emissions cap—a “cap-and-trade” system that gradually declines to zero by 2050. But such a system would require the approval of nearly 200 countries participating in the COPs. We already know that it is not realistic; one country even withdrew from the Paris Agreement.

The Open Coalition

We wanted to present a proposal that reflects Brazil’s ambition while remaining politically feasible. That led to the idea of creating the Open Coalition for Integrating Carbon Markets. The central goal is to bring together the world’s largest economies.

Three major objectives

In our view, the proposal must achieve three objectives at once: it must be effective in reducing emissions, fair, and politically viable. The solution we found is the Open Coalition: a group of countries sharing a common emissions cap, which would be reduced gradually over time.

Criteria for quotas

Each country’s quota would be determined using several factors. Population size is one—China and Luxembourg cannot receive equal quotas. Per capita income is another factor, ensuring social justice: higher-income countries would have stricter quotas, giving developing countries room to emit more while requiring wealthier nations to accelerate their decarbonization.

Finally, there must be a border adjustment mechanism—different from the European Union’s CBAM (which imposes a carbon price on emissions embedded in imported products)—to balance trade considerations fairly across coalition members.

Border adjustment

How does the EU’s proposal differ from ours? First, governance: the CBAM is unilaterally established by the EU, whereas in our coalition, all participants would share in governance. Only those unwilling to price carbon would remain outside—and they would bear the consequences. Moreover, our proposal would not create a financial flow from poorer nations to wealthier ones.

Money for adaptation

We propose directing part of the revenue collected from the carbon market and border adjustment toward climate adaptation efforts in developing countries. This would create a permanent financial flow to address the climate crisis.

In summary, the proposal is effective. It imposes a cap, it is fair because it incorporates a per capita income mechanism, and it is politically viable because it does not require consensus among 200 countries. All that is needed is a coalition strong enough to move forward. If it includes Brazil, the EU, and China, it could encourage others to join. Another relevant player is California, which—if it were a country—would rank as the world’s fourth-largest economy.

Social justice mechanisms

We are considering differentiated border adjustments based on per capita income—countries with lower income levels could be exempt from paying or required to pay less.

*By Daniela Chiaretti — São Paulo

Source: Valor International

https://valorinternational.globo.com/

09/12/2025

The government may withdraw support for a bill amending Brazil’s corporate law and creating a National Circular Economy Policy, after changes introduced by the rapporteur, Congressman Luciano Vieira, in the latest draft presented on Wednesday (10). Valor has learned that the Lula administration is considering requesting that the two proposals be split, so they can proceed separately. Strong resistance from business groups and a coalition of congressional caucuses representing the productive sector is likely to complicate Mr. Vieira’s plan to put the bill to a vote next Tuesday (16).

The corporate law bill was sent to Congress in 2023, in the wake of the accounting scandal at retailer Americanas, and is part of the Finance Ministry’s microeconomic agenda. It had stalled until March, when it was bundled with bills on public procurement and circular economy as a strategy to speed up a floor vote. The package briefly appeared on the voting agenda earlier this month but was not considered. Mounting opposition to provisions in the combined bill has now led the government to rethink its strategy and weigh splitting the proposals.

One point of contention involves the mechanism for collective lawsuits against administrators, controlling shareholders, or intermediaries accused of causing losses to companies or to the capital markets by violating rules set by Brazil’s securities regulator CVM. In a previous version of his report, Mr. Vieira had endorsed an “opt-out” model, in which all shareholders of a given class are automatically included in such collective actions. That approach was supported by the Finance Ministry.

But in his latest draft, the rapporteur reverted to an “opt-in” model, where only investors who formally sign on would be included in collective suits. Finance Ministry officials say they will not support the bill under this framework, arguing that it renders the proposal “ineffective,” since individual investors already have the right to file claims on their own.

Sources close to the ministry lamented the shift, noting that the earlier draft reflected a consensus with investors and companies. The reversal was also criticized by AMEC, the Capital Markets Investors Association. “The return to the opt-in model is a technical mistake. A collective protection mechanism is incompatible with selective protection of investors, because it leaves less organized groups, such as retail investors, without adequate safeguards,” said AMEC President Fábio Coelho.

While the Brazilian Association of Public Companies (ABRASCA) favors the opt-in model, it also expressed concerns. “We welcome the return to opt-in, which we see as the better option. But companies have increasingly flagged issues with sector-specific provisions inserted in this bill. We will meet next week to take a position on these additions, which were surprising,” said ABRASCA President Pablo Cesário.

On minority shareholders, the bill establishes civil liability for administrators and controlling shareholders in cases of violations of disclosure rules. It also explicitly provides for collective civil actions to compensate investors, in a model similar to U.S.-style class actions, and expands CVM’s investigative powers.

The circular economy provisions, however, are proving even more contentious. Mr. Vieira added sector-specific obligations and plans covering mining, agriculture, construction and infrastructure, automotive, oil and gas, and sanitation.

A report obtained by Valor from the National Confederation of Industry (CNI) argued that the proposed National Circular Economy Policy “directly impacts the entire productive sector, regardless of size, nature, or scale of operations.” According to CNI, passage of the bill would subject millions of industrial and agribusiness facilities, farms, and commercial and service establishments to more than 70 new legal obligations. CNI did not comment.

The coalition of congressional caucuses representing business interests issued a statement saying the original bill had been “completely distorted by a regulatory maze that ignores the country’s economic reality,” and that the bundling of dozens of other unrelated proposals had created “a legislative monster of more than 100 articles imposing unrealistic obligations and disproportionate penalties on the productive sector.”

The statement is backed by the Congressional Entrepreneurship Caucus and others representing free markets, commerce and services, agribusiness, sustainable mining, health, competitiveness, and biodiesel, among others. They argue that “the regulatory burden, indiscriminately affecting companies of all sizes and sectors, represents a serious risk to Brazil’s competitiveness, since many firms lack the technical or financial capacity to comply with such complex and costly requirements.”

Mr. Vieira declined to comment.

*By Beatriz Roscoe — Brasília

Source: Valor International

https://valorinternational.globo.com/

 

 

 

09/12/2025 

he Bank Workers’ Union of São Paulo, Osasco and Region has filed a class-action lawsuit against Itaú Unibanco after the bank carried out a mass layoff of employees on Monday (8). According to the union, around 1,000 workers were dismissed without the union being given prior notice.

In a statement released Thursday evening (11), the union said: “In addition to being unjustifiable in light of the bank’s multibillion-real profits—over R$22.6 billion in the last half-year alone—the mass layoffs by Itaú disrespect employees, the Collective Bargaining Agreement (CCT) of the banking category, and Brazilian labor law, which requires prior negotiation with unions in cases like this.”

“We heard from the dismissed employees in a plenary session held this Thursday (11). Itaú violated basic rules protecting employment and disregarded the collective bargaining table. A bank that earns billions cannot treat its workers as disposable numbers,” said Neiva Ribeiro, the union’s president, in the statement. “We will take legal action to reverse this attack and hold Itaú accountable for its disregard for the law and for the category,” she added.

Itaú did not immediately reply to requests for comment.

*By Eulina Oliveira — São Paulo

Source: Valor International

https://valorinternational.globo.com/

 

 

 

09/10/2025

White House spokesperson Karoline Leavitt said Tuesday (9) that the Donald Trump administration is willing to use “economic and military might” to “protect free speech around the world,” referring to the ongoing trial of former President Jair Bolsonaro before Brazil’s Supreme Federal Court (STF). Her comments came during a press briefing after she was asked about the potential conviction of Mr. Bolsonaro.

“Freedom of speech is arguably the most important issue of our time. It is enshrined in our Constitution and the president believes in it strongly… we have taken significant action with regards to Brazil in the form of both sanctions, and also leveraging the use of tariffs,” Ms. Leavitt said.

“This is a priority for the administration, and the president is unafraid to use the economic might, the military might of the United States of America, to protect free speech around the world,” Ms. Leavitt added.

She said there are currently “no additional actions” being taken by the U.S. government against Brazil. Ms. Leavitt noted the tariffs and sanctions already imposed by Washington were intended to safeguard American interests abroad.

Foreign ministry responds

Brazil’s Ministry of Foreign Affairs issued a statement condemning what it called “threats” of using force and said the country would not be intimidated.

“The Brazilian government condemns the use of economic sanctions or threats of force against our democracy. The first step in protecting freedom of expression is precisely to defend democracy and respect the will of the people expressed at the ballot box. That is the duty of all three branches of the Republic, which will not be intimidated by any form of attack on our sovereignty. The Brazilian government rejects the attempt by anti-democratic forces to instrumentalize foreign governments to pressure national institutions,” the statement said.

Earlier in the day, Institutional Relations Minister Gleisi Hoffmann had already responded to the White House spokesperson via social media. She called the remarks a threat of “invasion” of Brazil, calling the situation “unacceptable.” She also blamed the Bolsonaro family for the escalating tension between the two countries.

“The Bolsonaro family’s conspiracy against Brazil reached its peak today with the statement from Donald Trump’s spokesperson that the U.S. may even use military force against our country. It’s not enough that there are tariffs against our exports and illegal sanctions against government ministers, the Supreme Court and their families, now they’re threatening to invade Brazil to keep Jair Bolsonaro out of jail. This is completely unacceptable,” she wrote.

(With international agencies.)

*By Renan Truffi and Sofia Aguiar — Brasília

Source: Valor International

https://valorinternational.globo.com/

 

09/10/2025 

Justice Luiz Fux’s vote in the Supreme Court’s First Panel on Wednesday (10) cements the more defendant-friendly approach he has adopted during the criminal proceedings over the coup plot—a departure from the tough-on-crime posture that marked his role in the Car Wash anti-corruption task force.

At the start of his remarks, Justice Fux questioned whether the Court had jurisdiction to try former President Jair Bolsonaro and echoed a central argument of the defense teams: that there was not enough time to review the “billions of pages” of case files.

Justice Fux was once known for his hard line on criminal matters, earning him the label of one of the court’s most staunch Car Wash supporters. In recent months, however, he has emerged as the main dissenting voice in the trial involving Mr. Bolsonaro and the January 8, 2023, attacks on Brazil’s halls of power.

When the first cases of the rioters who stormed the headquarters of the three branches of government came before the court, Justice Fux joined Justice Alexandre de Moraes in imposing harsher sentences. Now, however, he has positioned himself as Mr. Moraes’s main counterweight.

The turning point came in March, when Justice Fux requested more time to study the case of Débora Rodrigues dos Santos, a hairdresser who spray-painted “Game over, sucker” on the Justice statue outside the Supreme Court. When he cast his vote, Justice Fux argued for a sentence of one year and six months—far below the 14-year prison term ultimately imposed by the First Panel.

*By Isadora Peron, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/

 

 

09/08/2025

Petrobras is considering acquiring a corn ethanol producer this year, sources told Valor. If confirmed, the move would signal the state-controlled company’s return to the sector, which it exited in the mid-2010s with the sale of assets. The corn ethanol market has been expanding as an alternative to sugarcane-based production. Ongoing projects in the segment total R$23 billion in investments.

In a statement, Petrobras said it is conducting studies and analyses of potential opportunities in the bioproducts segment, which includes ethanol.

The company added that its current 2025-2029 business plan foresees investments in ethanol, “preferably through minority strategic partnerships or shared control with relevant sector players.” While not denying ongoing talks, Petrobras said there are no firm decisions on corn ethanol projects. “The company clarifies that there is no definition regarding the raw material to be used in ethanol production projects,” it noted.

The potential move comes amid Petrobras’s broader push in fuel distribution. Since the start of the Lula administration, the company has signaled interest in returning to the distribution market, fueling speculation about possible mergers and acquisitions in the sector. In August, Valor reported that Raízen shareholders Shell and Cosan were seeking a new partner.

Days later, O Globo reported that Petrobras was studying a stake purchase in Raízen. The company denied the claim. “There is no project or study of investment in ethanol or distribution with Raízen,” Petrobras said at the time. Sources close to the company told Valor that Petrobras is evaluating opportunities with several firms, but Raízen is not currently among them.

Another scenario raised in the market is a possible deal with Vibra Energia, the former BR Distribuidora privatized under former President Jair Bolsonaro. Analysts and industry executives, however, consider such a transaction unlikely, partly because Petrobras would need to launch a full takeover bid to acquire a stake.

There would also be potential antitrust hurdles due to the potential market concentration. As of the close of trading on B3 on Friday (Sept. 5), Vibra’s market capitalization stood at R$27.9 billion. The company declined to comment.

Despite these obstacles, Petrobras has criticized the privatization of BR Distribuidora, arguing that it distanced the company from end customers. It has since sought direct supply agreements with large clients for products such as diesel. With Vale, Petrobras has signed contracts for marine fuel containing 24% biodiesel (bunker B24). The company has also signaled plans to return to the cooking gas (LPG) market.

Industry sources say buying another distributor or building a new network from scratch may not be easy for Petrobras, given a brand agreement with Vibra that includes a non-compete clause until 2029. Until then, Vibra retains the right to use the BR brand, formerly owned by Petrobras.

Vibra has expanded in recent years through acquisitions aligned with the energy transition. It acquired Comerc Energia (now up for sale), at the time Brazil’s largest independent power trader, and Zeg Biogás, a biogas and biomethane producer. It also invested in the EV charging startup EZVolt and formed a joint venture with Copersucar for ethanol trading.

Together, Vibra, Raízen, and Ipiranga control 61.3% of the distribution market, according to Brazil’s Petroleum Agency (ANP), based on data from Sept. 3.

These moves come as the fuel market faces mounting challenges from irregular operators. Major distributors have been steadily losing share to companies engaging in practices such as fraud, adulteration, and tax evasion.

Last week, federal and state authorities stepped up enforcement against multibillion-real tax evasion and fuel fraud schemes linked to the Primeiro Comando da Capital (PCC), Brazil’s most powerful criminal organization.

*By Fábio Couto — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

 

 

09/08/2025

For nearly 15 years heading the marketing of one of Brazil’s largest insurance groups, Alexandre Nogueira, chief marketing, communications, and customer relations officer at Bradesco Seguros, says that so-called “longevity marketing” is among the most challenging and transformative themes of the day.

For the executive, consumers over 60 already are, and will increasingly be, relevant in influence, purchasing power, and opinion. This demands a rethinking of products, services, and above all, communication. “The generation that is aging today does not want to be treated as ‘old,’ but as active, productive, and connected,” he said.

The key, Mr. Nogueira argues, is recognizing age diversity. “Each generation has its preferred channels, its own language codes, and its own expectations. The brand that manages to communicate authentically with all of them will gain an enormous competitive edge.”

Read below the main excerpts from the interview with Valor.

ValorInsurance marketing has to sell something intangible: trust. How is that built in practice?

Alexandre Nogueira: With consistency. Consumers need to see consistency between what a brand promises and what it delivers. That comes through research, active listening, and the ability to test, assess results, and adapt quickly. Today, touchpoints—social media, call centers, chats, or WhatsApp—are a rich source of information. That’s where brands can capture criticism, suggestions, and expectations. Making proximity and empathy tangible requires knowing how to listen and respond.

ValorDoes this integration with customer channels, as at Bradesco Seguros, change the role of marketing?

Mr. Nogueira: Completely. Marketing is no longer just about communication but has become business intelligence. There’s no point in creating narratives if they aren’t connected to the customer’s real experience. Active listening makes strategies more assertive because it translates people’s voices into action. Talking about trust, proximity, and agility is now the essence of marketing, whether in healthcare, retail, technology, or finance.

ValorAnd how do you turn these attributes into concrete messages?

Mr. Nogueira: First, clarity on brand values. Then, consistency in communicating them across all touchpoints. It’s not just about a campaign, but about the entire journey, from ad to customer service. The challenge is turning abstract concepts like trust into real and recognizable experiences. That’s what builds brand culture. When consumers realize they can rely on a company in critical moments, that’s when promises become reality.

ValorBrazil is experiencing rapid population aging. How does longevity enter the marketing agenda?

Mr. Nogueira: Longevity is one of the most challenging and transformative themes. It means rethinking products, services, and above all, communication. The generation aging today doesn’t want to be seen as “old” but as active, productive, and connected. Marketing must engage multiple generations simultaneously, from young people just starting their journey to those over 60.

ValorHow is that done in practice?

Mr. Nogueira: The 60+ segment already is, and increasingly will be, relevant in opinion, purchasing power, and influence. Allocating a meaningful share of planning to “longevity marketing” is strategic for medium- and long-term results. And it’s not only about those over 60, but also about those who value this journey, especially the 30+ segment, which is already seeking information and preparation to live longer and better.

ValorHow would you define “longevity marketing”?

Mr. Nogueira: It’s a set of strategies and actions to promote brands, products, and services geared toward a longer, healthier life. It involves four pillars highlighted by experts: continuous learning, healthy habits, financial planning, and social engagement. Ideally, it should be driven by intergenerational teams, capable of adopting an empathetic and relevant language. It is likely to gain space in family conversations, schools, and universities, and it requires research and data science to be handled effectively.

ValorHow do you adapt to so many generations coexisting in the marketplace?

Mr. Nogueira: Today, up to seven generations are active—from Alpha to Beta—coexisting in society, and many also in the workplace. That’s why marketing has to be intergenerational, with diverse teams and contextualized communication. Each generation has its preferred channels, its language codes, and its expectations. The brand that manages to engage all of them authentically will gain an enormous competitive edge. That doesn’t mean speaking to everyone the same way, but understanding nuances. What resonates with a 25-year-old isn’t the same as what appeals to someone who’s 65.

ValorAnd how do you balance this long-term view with the need for quick responses to change?

Mr. Nogueira: That’s the art of contemporary marketing: combining strategy with agility. Consumer behavior changes in real time. If a brand doesn’t have the sensitivity to capture those shifts, it loses relevance.

*By Andrea Assef — São Paulo

Source: Valor international

https://valorinternational.globo.com/

 

 

09/08/2025 

Economists say a concentration of federal spending in the second half of 2025 is likely to shift Brazil’s fiscal impulse from negative to neutral, or even positive. What remains uncertain is how this stimulus will ripple through demand and inflation, especially as markets look for clues about when the Central Bank may begin cutting interest rates.

Ítalo Franca, head of fiscal policy and special studies at Santander, estimates that the federal government’s fiscal impulse was between -0.8 and -1 percentage point of GDP in the first half of the year. For the second half, however, he expects a positive impulse of about 0.5 points. For 2025 as a whole, Franca still sees a slightly negative figure. “I’m projecting -0.3 points of GDP, but across all models it ranges from neutral to slightly negative. The year has two different halves. From now on, things tend to accelerate,” he said.

Mr. Franca noted that Brazil has seen two strong years of fiscal stimulus. Between 2023 and 2024 alone, the federal government’s impulse reached 2 points of GDP, and the figure climbed to 2.5 points when including states, municipalities, and state-owned companies. “It was a significant fiscal push,” he said.

This year began with fiscal tightening. Of the R$30 billion in budget freezes announced in early 2025, only R$10 billion remain, Mr. Franca pointed out. Moreover, delays in approving the 2025 budget meant that government execution was low in the first half, pushing more spending to the second. Adding to that is the R$60 billion in court-ordered debt payments (precatórios) made in July, whereas in 2024, those payments occurred in February.

“We went through the first half with both fiscal and monetary policy pulling in the direction of slowing activity. Now, fiscal policy is set to become more expansionary,” Mr. Franca said. “We’ll likely see more execution of congressional earmarks and discretionary spending, with a stronger release of investment funds.”

Still, most economists forecast an overall slowdown in the second half due to the lagged effects of high interest rates. In this context, Mr. Franca noted that families may use precatório payments to reduce debt or build savings, rather than spend them, dampening the multiplier effect. “But I think the fiscal impulse will start to add resilience,” he said.

Fiscal boost

Looking ahead to 2026, Mr. Franca expects a positive fiscal impulse of 0.4 points of GDP from the federal government alone. “There’s a series of measures set to impact the economy. That’s where the market’s biggest uncertainty lies, how much of this stimulus will materialize.”

Spending by subnational governments could also play a major role. “States are in a position to go through one semester of adjustment and start expanding [spending] again in the last quarter of 2025,” Mr. Franca said. He estimates that state and local governments could add around 0.5 points of GDP in fiscal stimulus between the end of this year and mid-2026.

“Keep in mind they have around R$150 billion in net cash. Not all of it can be spent—some is earmarked for pensions—but it shows there’s fiscal space,” he said. States posted a R$26 billion primary surplus in the 12 months through July, but Mr. Franca expects that to shrink. “In 2022 [an election year for governors], state surpluses went from R$100 billion in April to R$3 billion in May 2023,” he recalled.

Some federal programs could further boost regional spending. The PROPAG debt repayment plan for states could add another 0.2 points of GDP in fiscal impulse, depending on how many governors participate.

Another factor is the proposed constitutional amendment (PEC 66), which would cap precatório payments by states and municipalities and allow longer timelines for settling pension-related debts. “So we should see rising fiscal stimulus from now on,” Mr. Franca said.

“The impact of income tax exemptions on demand could be significant

—Renan Martins

 

This is one reason why Santander continues to forecast Brazil’s benchmark interest rate Selic remaining at 15% through year-end. “Fiscal stimulus creates uncertainty. It may limit how much room monetary policy has. There are big questions about how this stimulus will affect demand and inflation. Rate cuts look more feasible in the first quarter of next year,” Mr. Franca said.

The government’s recently announced support package for sectors hit by U.S. tariffs also enters the picture. For now, BTG Pactual economist Fábio Serrano sees it as “well balanced” fiscally. But since the package falls outside Brazil’s spending cap and primary result targets, it risks becoming more expansive as it moves through Congress, he noted in a report.

Even with this new spending, Mr. Serrano projects that federal expenditures won’t grow more than 3% in real terms in 2025. “If we reallocate the precatórios paid at the end of 2024 to early 2025, when the money actually reached families and businesses, primary spending would contract 1.2% in real terms, after real increases of 8.1% in 2024 and 7.7% in 2023,” he wrote.

Economic consultancy 4intelligence estimated a negative fiscal impulse of -1.5 points of GDP in the first half of 2025, which helped to contain aggregate demand and inflation. That restraint, however, is unlikely to persist in the second half, with projections pointing to a nearly neutral fiscal impulse by year-end.

“The government has had some success in raising revenue, which eases concerns about the primary deficit,” said Renan Martins, economist at 4intelligence.

On the demand side, Mr. Martins noted that the planned expansion of income tax exemptions starting in 2026 may be fiscally neutral—offset by higher revenue—but will likely have a significant impact on consumption. “The income brackets that will benefit are the ones most likely to boost aggregate demand, which will affect inflation next year and beyond,” he said.

Mr. Martins has not factored in a potential increase in Bolsa Família cash-transfer payments, despite the upcoming election year. “Due to new eligibility criteria, many families no longer qualify for the program. If the government wants to increase payouts next year, there’s a bit of room for that,” he said.

In his view, most of the fiscal impulse in the coming quarters will come from regional governments. “In recent years, states secured a lot of loans with federal approval or guarantees. Now, heading into another election cycle, they’ll likely strike new deals with Congress to release earmarked funds,” Mr. Martins said.

*By Anaïs Fernandes — São Paulo

Source: Valor International

https://valorinternational.globo.com/

 

 

09/05/2025 

Even before Senate President Davi Alcolumbre convenes a session to review presidential vetoes, Congress is already maneuvering to use a provisional presidential decree (MP) —which creates the Special Environmental License (LAE)—to reinstate nearly the entire text of the environmental licensing bill passed by lawmakers in July.

At the same time, the government acknowledges difficulties in upholding the 63 vetoes issued by President Lula last month.

Just six days after President Lula signed the new licensing law, legislators and senators opposed to the executive’s vetoes filed 833 amendments to the MP, which originally covers only the LAE and consists of just six articles. The LAE, championed at the time by Mr. Alcolumbre, a government ally, is a new type of permit designed to speed up approvals for projects deemed strategic.

Lawmakers are using this as one of their tactics while Mr. Alcolumbre delays calling a joint congressional session to analyze the vetoes — expected in about two weeks, though no date has been set. Overturning Lula’s vetoes is the main goal of these lawmakers, most aligned with the powerful agribusiness caucus, which has been pressing Mr. Alcolumbre to schedule the session.

Congressman Pedro Lupion, head of the Congressional Agricultural Front (FPA), said the government shows no interest in advancing the MP. For now, there is not even a rapporteur or chair for the joint committee, which has yet to be formed. The MP must be voted on within four months, or it will expire.

“We are mobilized to overturn the vetoes. But before that, we submitted amendments to get as close as possible to the bill we approved,” Mr. Lupion told Valor, noting that he alone filed 19 amendments. “We want to force either a vote on the vetoes or on the MP. Something has to happen. The amendments reflect the text of the licensing bill. We are waiting on President Davi [Alcolumbre].”

Congressman Zé Vitor, also from the agribusiness bloc and rapporteur of the licensing bill in the House, noted that the proposed amendments to the MP contain “minor text adjustments that the internal rules previously did not allow.”

Broadly, the hundreds of amendments seek to reinsert into the general licensing law provisions that President Lula vetoed, such as: the Environmental License by Adhesion and Commitment (LAC) for medium-impact projects; exemption from licensing for rural producers whose Rural Environmental Registry (CAR) is still under review; and the removal of requirements to consult intervening agencies—such as the National Foundation for Indigenous Peoples (FUNAI)—in licensing processes affecting non-demarcated areas.

Randolfe Rodrigues, the government’s leader in Congress, said that proposing amendments is a legitimate part of the legislative process but warned that the executive would veto again if lawmakers tried to reinstate sections President Lula had struck down.

He admitted, however, that the government faces difficulty securing enough votes to block an override. The administration has not ruled out challenging the issue in court but is instead seeking a political agreement.

“Issues that violate the Constitution would obviously be subject to review, but we are not working with that scenario. Our focus is on maintaining the vetoes. I admit that keeping them is challenging right now. We are trying to build consensus and a majority, but it is a difficult scenario,” Mr. Rodrigues told Valor.

*By Cristiano Zaia and Caetano Tonet — Brasília

Source: Valor International

https://valorinternational.globo.com/

09/05/2025

Central Bank data show Master held R$62.2 billion in deposits eligible for FGC coverage — Foto: Divulgação
Central Bank data show Master held R$62.2 billion in deposits eligible for FGC coverage — Photo: Divulgação

The Central Bank’s decision to block a merger between Banco Master and Banco de Brasília (BRB) has left few alternatives for the financial institution controlled by Daniel Vorcaro. The outcome places Master on the verge of regulatory intervention and, ultimately, liquidation, unless it can resubmit the deal or find a new buyer within days, scenarios analysts see as highly unlikely.

In the event of an intervention, the Central Bank would remove the bank’s executives and appoint an administrator, who would then trigger the Credit Guarantee Fund (FGC) to cover Master’s deposits. While drastic, this is the standard course when no market solution is available for a struggling bank, or when a deal poses a greater systemic risk than allowing a failure.

This was the approach taken in Master’s case, despite political pressure surrounding the decision. The Central Bank did not disclose details, but Valor learned that overvalued loan portfolios were among the problems identified. Should intervention confirm that the bank cannot survive, regulators could order an extrajudicial liquidation to wind down operations.

Because Master expanded by heavily raising funds through certificates of deposit (CDBs), the bill would fall mostly on the FGC, meaning the cost would be borne by large banks and other member institutions of the fund.

Master has not yet published its first-half results. Central Bank data show it held R$62.2 billion in deposits eligible for FGC coverage. Since the fund guarantees up to R$250,000 per depositor, the actual payout would be smaller. Still, when the BRB deal was announced on March 28, estimates suggested the FGC might have to cover around R$50 billion if the bank failed.

Costly payout

With R$107.8 billion in available liquidity, the FGC could see nearly half its resources depleted. In that case, it would likely increase contribution rates and require banks to pay in advance the equivalent of five years of deposits. Financial institutions currently contribute 0.01% per month of eligible deposits. Though small, if doubled and accelerated, the amounts would reach billions of reais for major banks. Itaú Unibanco alone might have to contribute about R$5 billion, sources said.

Other large banks would also face billion-real charges. While this solution avoids public money, it could push up lending spreads.

Master grew rapidly by attracting retail investors with CDBs offering above-market yields, all covered by the FGC. However, the bank invested the funds in risky and illiquid assets.

Founded 30 years ago, the FGC has since guaranteed deposits in 40 failed institutions. Its largest historical payout was R$3.7 billion in 1997 to cover Bamerindus, equivalent to R$19.6 billion today. A bailout of Master would be the biggest in its history.

The bank holds only R$690 million in demand deposits, shielding it from mass withdrawals. Most funding is in term deposits, which cannot be redeemed before maturity. Investors can only try to sell them on secondary markets, often at a discount.

Master’s urgent challenge is meeting maturing deposits. Some CDBs pay up to 140% of the interbank rate (CDI), pushing costs higher. “The CDI alone is at 15% a year, so the carrying cost is extremely high,” a banking executive said.

New deal

Both BRB and Master signaled plans to appeal within the Central Bank, possibly by addressing flagged issues and resubmitting the deal. Analysts, however, see slim chances of approval. The banks have ten days to request a review.

Mr. Vorcaro could also look for another buyer, but this would require a large group capable of closing quickly, an unlikely scenario. He visited the Central Bank headquarters in Brasília on Thursday (4), but people familiar with the matter consider a last-minute solution improbable. In recent months, Mr. Vorcaro negotiated asset sales with BTG Pactual and J&F, the Batista family’s holding company. In May, BTG bought R$1.5 billion in shares, receivables, and other assets.

“The chance of a new buyer is very low. There’s no time for due diligence, especially with Master’s complex balance sheet,” said a lawyer experienced in such transactions. “The Central Bank’s rejection of the BRB deal is practically a ‘pre-intervention.’ It’s hard to see how the next step won’t involve the FGC,” added a senior banking executive, noting that regulators conducted an unusually deep review of Master’s situation.

A quicker way for the bank to raise cash would be to sell loan portfolios, a simpler process than asset sales, though it could worsen challenges later. It might also face Central Bank resistance. “The regulator is watching everything under a microscope, down to a R$100 instant payment,” one source said.

Master has also faced a turbulent week. Federal Police and prosecutors launched a major operation against 40 funds allegedly used to launder money for organized crime. Among the targets were Reag and Trustee, firms with extensive business ties to Mr. Vorcaro and Master.

Meanwhile, a political maneuver by Congress’s centrist bloc to allow lawmakers to dismiss Central Bank directors highlighted Mr. Vorcaro’s lobbying pressure, triggering strong pushback.

Public opinion also turned after images surfaced of Mr. Vorcaro vacationing in Europe while Master was in crisis and had already borrowed R$4 billion from the FGC. He reportedly tried to secure further emergency liquidity from the fund in recent weeks but was denied. Master declined to comment.

*By Álvaro Campos, Talita Moreira and Gabriel Shinohara — São Paulo and Brasília

Source: Valor International

https://valorinternational.globo.com/