Ambev sells Do Bem juice brand to Brazilian Tial

Amount has not been disclosed; deal pending approval by antitrust regulator

01/07/2025

Ambev has decided to sell its juice brand Do Bem, acquired in 2016, to the Brazilian company Tial. According to Ambev, the agreement has been signed and is pending approval from the antitrust watchdog CADE. The amount involved in the deal has not been disclosed. It includes selling intellectual property rights and formula copies of Do Bem, which will continue to be marketed by Tial. Columnist Lauro Jardim from newspaper O Globo initially reported the news.

When acquired in 2016, the acquisition of Do Bem was part of Ambev’s strategy to expand its non-alcoholic beverage division. The company now says the sale will allow it to prioritize investments in other brands and business segments. “Over the past eight years, Do Bem has experienced significant innovations, reached more regions in Brazil, and expanded its presence to new points of sales,” Ambev noted in a statement. In the third quarter of 2024, the non-alcoholic beverage division represented 8.8% of Ambev’s total revenue.

One of Do Bem’s main competitors is Coca-Cola’s Del Valle. However, the sector is characterized by a variety of strong regional brands.

Tial, founded in 1986 in Visconde do Rio Branco (Minas Gerais), describes itself as a producer of ready-to-drink fruit-based beverages made with natural ingredients and no chemical additives. The company has an annual production capacity of 96 million liters. Currently, it offers 51 products, including nectars, 100% juices, other fruit-based beverages, and coconut water. In addition to domestic sales, the group exports to countries such as the United States, Japan, and Portugal.

Tial is owned by the food manufacturing group Pif Paf (through the holding company CRL Empreendimentos) and the investment fund Victoria Falls, which invests in various sectors such as mining, healthy foods, and administrative support services. The companies declined to comment on the deal.

Pif Paf considered going public in 2021 but now faces a complex financial situation, advancing with asset sales to reduce its leverage. The company has hired G5 Partners to develop a plan focused on debt reduction.

The request submitted by the companies to CADE requires that the deal be reviewed under a fast-track process, which applies to deals with minimal competitive harm and market concentration below 20%. In the filing submitted to the antitrust regulator, the companies indicated that the combined market share of the buyer and the target business “in all presented market scenarios was significantly below the 20% threshold,” based on data from Scanntech.

In markets such as coconut water, non-carbonated non-alcoholic beverages (like sodas), and ready-to-drink juices, the consolidated business holds a market share of less than 10%. According to the company, the low market share demonstrates that the concentration resulting from the deal would be “minimal and unlikely to raise competitive concerns.”

Zeca Berardo, a competition law expert and partner at Berardo Advogados, said the process is expected to proceed smoothly at the antitrust regulator. “It’s a major player in the beverage sector divesting a business line to a relatively small player. That should not raise any competition concerns,” he said, noting that other significant competitors in the sector, like Coca-Cola, continue to invest.

According to Mr. Berardo, CADE has taken less than 20 days to study cases like that. A third party can oppose the deal within 15 days, or for a council member to request a detailed review of the case—both scenarios are deemed unlikely by the expert.

By Cristian Favaro  e Ana Luiza de Carvalho  — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Brazil’s trade surplus declines, uncertainty looms over 2025 outlook

Despite a 24.6% drop, 2024 posts second-best performance; exchange rate and U.S.-China tensions add to doubts

01/07/2025

Brazil’s trade surplus for 2024 reached $74.55 billion, a 24.6% drop from the record-breaking $98.9 billion in 2023. Despite the decline, 2024 still secured the second-highest trade surplus since official records began, in 1997, according to the Ministry of Development, Industry, Trade, and Services (MDIC). Looking ahead to 2025, experts foresee a surplus comparable to or slightly better than 2024, though still significantly below the peak achieved in 2023.

According to the Ministry’s Foreign Trade Secretariat (SECEX), 2024 saw $337 billion in exports and $262.48 billion in imports. Declining commodity prices and a rise in imports contributed to the smaller surplus.

For 2025, a slower domestic economy is expected to curb imports, while an anticipated strong agricultural harvest could boost exports. However, uncertainty persists regarding export prices, exchange rate, and the impact of renewed U.S.-China trade tensions, especially as President Donald Trump assumes office on January 20.

“Given the expected good harvest, the surplus should remain at 2024 levels or potentially reach $80 billion if the domestic slowdown materializes,” said Lucas Barbosa, an economist at AZ Quest. He projects imports will stabilize near the 2024 level of $262 billion, while exports could rise to $350 billion.

Similarly, Gabriela Faria, an economist at Tendências Consultoria, forecasts a $77.6 billion surplus for 2025. She expects a 1.6% drop in export values due to declining prices but notes potential gains in volume, particularly from minerals, oil, and grains. Domestic grain production is projected to grow 8.2% over the 2023/24 cycle, with soybeans poised to reach record levels, according to estimates from Brazil’s National Supply Company (CONAB).

On the import side, Tendências projects a 3.1% decline in 2025 due to weaker domestic activity. Tightened financial conditions, increased internal uncertainties, slower global growth, and reduced fiscal stimulus form the basis for Tendências’s GDP growth estimate of 1.9% for this year, down from 3.4% in 2024, according to Ms. Faria.

Mr. Barbosa of AZ Quest cautioned that the exchange rate remains a significant challenge. “A dollar trading above R$6 favors exports, especially of goods that might otherwise be consumed domestically. For example, animal protein becomes increasingly attractive for export,” he said.

Herlon Brandão, director of foreign trade statistics at the MDIC, anticipates imports in 2025 will remain at or exceed 2024 levels, supported by Brazil’s projected economic growth. He also noted that there are no significant indications of large commodity price fluctuations.

On the export side, Mr. Brandão expects global economic growth to increase demand for Brazilian goods, particularly food products like soybeans and meat. “As the agricultural harvest recovers”, he said, soybeans should reclaim their position as the top export product, replacing oil. SECEX forecasts a trade surplus for 2025 ranging from $60 billion to $80 billion.

Industry concerns

The wide range in SECEX’s projections reflects the unpredictable nature of 2025, said José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB). His preliminary estimate points to a $93 billion surplus, assuming moderate price increases and volume growth. Commodity prices, he said, are sensitive and can react to any external events. “AEB’s projections come with many caveats,” he noted. Mr. Castro also highlighted uncertainties surrounding U.S.-China trade relations and their potential impact on global markets, alongside concerns about the exchange rate.

Tatiana Prazeres, foreign trade secretary at the MDIC, described 2024’s trade performance as positive, highlighting the “sustained high level of exports.” The decline in export value, she said, resulted from lower product prices, despite a 3% increase in export volumes. SECEX data showed a 0.8% drop in export value for 2024, driven by a 3.6% fall in prices.

Mr. Barbosa of AZ Quest highlighted notable export products in 2024, including beef, pork, sugar, molasses, and coffee. While many of these goods suffered price declines, increased export volumes more than offset the impact.

Welber Barral, a partner at BMJ consulting, noted that the price drop in 2024 was primarily driven by commodities. “Imports, particularly capital goods, increased—a positive sign. Although the surplus fell by nearly 25%, it’s still impressive given Brazil’s historical performance. “A similar pattern could emerge in 2025, with imports expected to continue rising despite the strong dollar,” he said, citing anticipated GDP growth of around 2% even amid an economic slowdown.

Mr. Barbosa of AZ Quest added that 2024’s trade surplus aligned with initial expectations, but the resilience of imports was surprising. SECEX data showed import volumes grew 17.2% in 2024, while prices declined by 7.4%. “The volume data reflects robust domestic demand, which continues to flow outward via imports, particularly of capital goods and consumer goods,” he explained.

Capital goods imports were particularly strong, aided by lower prices, Mr. Castro of AEB noted. Government data showed that capital goods imports rose 20.6% in value in 2024, driven by a 25.6% increase in volume and a 4.7% price decline.

*By Estevão Taiar  e Marta Watanabe  — Brasília, São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Brazilian reserves lost $33.3bn in December with Central Bank auctions

Monetary authority sold $21.574bn in the spot market and $11bn in line auctions

01/06/2025

Currency interventions conducted by Brazil’s Central Bank in December decreased international reserves by $33.3 billion in one month, bringing the total to $329.7 billion by the end of 2024. At the end of November, the reserves level was $363 billion. Despite this decline, experts say the volume is still comfortable.

The level reached at the end of last year is lower than the $355 billion recorded at the end of 2023 but higher than the $324.7 billion in 2022. These are nominal values. Silvio Campos Neto, senior economist and partner at Tendências Consultoria, described December’s drop as “significant,” noting that reserves remain healthy. However, he cautioned that the rapid decline is a warning for the coming months.

“There was a strong intervention in the foreign exchange market in December, and it was not enough to reverse the pressure, indicating that the source of this movement is not entirely related to market dysfunction or a temporary dollar scarcity; it is more structurally linked to increased risk perception about Brazil,” he explained.

In December, the monetary authority held nine spot dollar auctions and five “line” auctions (with a repurchase agreement), totaling $32.574 billion. That included $21.574 billion in spot sales and $11 billion in line auctions. Looking at the volume of reserves, Danilo Igliori, chief economist at Nomad, also emphasized the level is comfortable. He noted that concerns could arise if the crisis seen in December escalates in 2025. “I don’t think that’s the scenario. It was an evident moment of stress, and the Central Bank responded well.”

Silvio Campos Neto from Tendências explained that the interventions were the main reason for the reserve reduction but also highlighted the impact of rising market interest rates in the United States. “That also affects the value as it reduces prices, especially U.S. bonds, which make up most of the reserves.”

The Central Bank stated that there is no consensus on the best metric to define the “optimal level” of reserves but indicated that periodic internal evaluations show Brazil is aligned with practices of similar countries.

In a press conference on December 19, the then-Central Bank president, Roberto Campos Neto, said the monetary authority was operating in the foreign exchange market as usual. He pointed out that the monetary authority intervenes whenever it perceives market dysfunction. Mr. Campos Neto also noted an unusually large flow at the end of 2024, with an above-average outflow of dividends as one of the reasons.

Fiscal concerns also influenced the exchange rate’s movement. At the end of November, the government announced measures that were poorly received by the market. The package was unveiled alongside a proposal to exempt those earning up to R$5,000 from income tax, which raised concerns and impacted interest rates and the exchange rate.

The National Congress approved the fiscal project in December, while the income tax proposal has yet to be submitted by the government to Parliament. The real continued to decline, closing 2024 with a 27.3% depreciation, at R$6.18 to the dollar.

Mr. Igliori from Nomad pointed out that December typically sees a higher dollar outflow, but the scale of the reserve drop is linked to stress regarding fiscal policy. “The auctions were significant, and yet the exchange rate moved considerably. It became clear that during December, we experienced a mini credibility crisis, and the impact on reserves was a consequence of the Central Bank’s management during this period through auctions,” he said.

Another factor in the end-of-year scenario was the tone of criticism from Workers’ Party’s (PT) members regarding the monetary authority’s actions. On the same day as Mr. Campos Neto’s press conference, PT President Gleisi Hoffmann posted on social media that the real’s depreciation in those weeks was a “speculative attack.”

In the press conference, the then director of monetary policy and current Central Bank president, Gabriel Galípolo, was asked about that possibility. He argued that the idea of a “coordinated speculative attack” did not represent market movements. Mr. Galípolo stated that “it’s not correct” to treat the market as a “monolithic block.”

The chief economist at Nomad said there is always pressure on the monetary authority and no reason to believe the new leadership will act unprofessionally. “I don’t see an inclination to introduce significant institutional uncertainty around the Central Bank’s autonomy, which has been hard-won.”

*By Gabriel Sinohara

Source: Valor International

https://valorinternational.globo.com/
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Foreign investors record largest stock market outflow since 2020

Institutional investors follow suit, ending the year with net withdrawals on the secondary market

01/06/2025

The turbulence triggered by the government’s unveiling of weaker-than-expected fiscal measures, anticipation of aggressive protectionist policies from Donald Trump, and rising Selic rates kept foreign investors at bay from Brazil’s stock market throughout 2024.

Data from B3, the Brazilian stock exchange, reveals that foreign investors pulled R$32.1 billion from the secondary market (trading of already-listed shares) last year. This marked the largest annual outflow since 2020, the first year of the pandemic, when the segment saw a R$40.1 billion deficit, according to a Valor Data analysis. The figures exclude IPOs and public offerings.

Institutional investors also ended 2024 with net withdrawals, recording a R$37.5 billion deficit in the secondary market. By contrast, only individual investors finished the year with a positive balance, contributing R$30.8 billion.

Michel Frankfurt, head of Scotiabank’s brokerage in Brazil, casts doubt on the prospect of significant foreign inflows in the near term. “We won’t see substantial flows. There might be some activity to capitalize on stock market bargains, but we lack a strong ‘narrative’ to create momentum. It’ll just be a ripple,” he explained.

Mr. Frankfurt added that Brazil appears to have been “abandoned” by global investors, hindered by its failure to differentiate itself on the global stage and internal woes like worsening government accounts and disappointment over the spending cut package.

HSBC analysts echoed this sentiment, expressing concern over the vicious cycle stemming from fiscal policy frustrations. Last week, they downgraded their recommendation for Brazilian equities from neutral to “underweight,” citing growing pessimism about the country’s outlook.

“Brazil fits the profile of a ‘classic value trap,’” wrote analysts Alastair Pinder, Nicole Inui, and Herald van der Linde in their report.

While acknowledging that Brazilian equities are currently undervalued—trading at a projected 12-month price-to-earnings ratio of 6.6 times—they argue that asset revaluation is “unlikely” until the Selic benchmark interest rate falls or fixed-income returns decrease, a shift they do not anticipate before the second half of 2025.

*By Bruno Furlani

Source: Valor International

https://valorinternational.globo.com/
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Share buybacks surge during interest rate hike cycle

By November’s close, 98 companies had approved programs, marking a 20% increase over 2023

12/30/2024

Amid one of the leanest periods for stock offerings on the Brazilian exchange, banks are witnessing a notable surge in share buybacks within their brokerage divisions. With market valuations depressed and no clear signs of recovery, companies are ramping up efforts to repurchase their own shares, seeing it as the most strategic allocation of cash under current conditions.

A survey by Valor Data, based on data from B3, reveals that 98 companies approved buyback programs in the year ending November, a 20% increase compared to all of 2023. The figure surpasses 100 when including companies listed abroad, such as XP and Stone, which recently announced multi-billion-dollar buyback initiatives.

According to B3, the total number of active buyback requests—some approved in prior years—now exceeds 110 companies, approaching a financial volume of R$80 billion.

For instance, when calculated at their maximum allowed repurchase volumes, the combined buyback programs of B3 Exchange, Eletrobras, and JBS surpass the total raised through subsequent stock offerings this year. Excluding Sabesp, which alone accounted for over half of the R$25 billion offering volume in 2024, this underscores the broader impact of diminished market values across most companies.

An investment banker notes that many firms view buying back their own shares as the best investment option in an environment dominated by risk aversion. This sentiment has gained traction amid the ongoing cycle of interest rate hikes, further deterring investors from the equities market. “In some cases, we are advising clients that the most prudent investment is in their own securities,” the source shared, adding that controlling shareholders are also exploring financing options to purchase shares in their own companies.

Celso Nishihara, a partner in Fator Bank’s mergers and acquisitions division, highlights that share buybacks can serve as a strategic tool for boards to create shareholder value. Companies can improve financial ratios and reduce shareholder dilution by repurchasing shares, particularly if the repurchased shares are subsequently cancelled. This approach immediately boosts earnings per share. “A company understands its own stock better than any other asset; there’s no information asymmetry in this case,” he explains.

The Fator Bank executive emphasizes that while share buybacks can be a useful tool, they are not a substitute for a growth strategy. “It cannot replace mergers and acquisitions (M&A) or investments in a company’s core business,” he notes. Additionally, he cautions that companies must avoid over-leveraging to finance buybacks. Under current regulations, directors may approve share acquisitions only if the company’s financial situation allows for their settlement without jeopardizing obligations to creditors or the payment of mandatory dividends. Moreover, sufficient resources must be available for such transactions.

Vitor Rosa, from Scotiabank’s capital markets division, links the surge in buybacks directly to the undervaluation of shares. Currently, the price-to-earnings ratio is 7.6 times, significantly below the 10-year average of 10.6 times. Mr. Rosa advises companies to evaluate business growth opportunities alongside buyback programs.

Leonardo Cabral, head of investment banking at Santander Brasil, observes that well-capitalized companies see buybacks as an efficient way to utilize cash reserves. “The capital markets are not reflecting the fair value of companies,” he asserts.

Analyst João Daronco from Suno Research adds that companies with strong operational performance and robust cash generation are increasingly opting for buybacks. “It’s one of the options for allocating cash,” he explains, citing companies like Vale and B3 as examples. He also notes that buybacks could gain further traction if dividend taxation is implemented, as businesses might turn to this instrument as an alternative.

The companies referenced in this analysis were not available for comment.

*By Fernanda Guimarães  — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Growing trade friction over environmental issues at the WTO

Brazil emerges as second leading nation raising concerns over other countries’ or blocs’ practices

12/30/2024

Trade frictions centered around environmental and national security issues are on the rise at the World Trade Organization (WTO), highlighting Brazil’s increasing challenges in the global trade arena. A WTO study reveals that Brazil ranked second in raising trade concerns in the environmental sector, challenging measures from other countries that could potentially obstruct Brazilian imports.

According to the report, 630 concerns were raised from 2016 to 2023, including 171 related to these specific topics.

The article “Canary in a Coal Mine: How Trade Concerns at the Goods Council Reflect the Changing Landscape of Trade Frictions at the WTO,” authored by Roy Santana and Adeed Dobhal from the WTO’s Market Access Division, indicates that the total interventions by member countries on these issues discussed at the Council for Trade in Goods (CTG) surged, peaking at 235 during the November 2023 meeting—the last month analyzed.

During that meeting, the number of interventions reached 83, accounting for 35% of the total 235. Combined, concerns involving environmental and national security issues were responsible for 56% of the interventions made by members at the gathering.

These interventions pertain to trade concerns, which may encompass measures such as non-tariff barriers, environmental policies, import or export restrictions, national security, subsidy programs, export controls, and sanitary and phytosanitary measures. The authors account for concerns arising from measures introduced by a WTO member for environmental objectives and political or national security tensions, topics seen as emerging trends according to CTG meetings.

Concerns involving national security increased from one in 2016 to 11 in 2018, and 14 in 2019, escalating to 30 by 2022 and reaching 25 in 2023. Those related to the environment rose from two in 2018 to three in 2019, and 16 in 2022, reaching 22 in 2023.

Analyzing member countries that raised trade concerns in at least one CTG meeting between 1995 and 2023, Brazil ranks second in raising trade concerns related to environmental issues, following Indonesia.

Brazil raised five trade concerns, questioning the Carbon Border Adjustment Mechanism (CBAM) tax imposed by the European Union on imports and the European Deforestation Regulation banning the entry of commodities linked to deforestation. Indonesia registered six complaints. China was a complainant in four cases, and Russia in three. The United States and the EU each raised one concern.

Regarding national security concerns, China was responsible for 15, and the U.S. for two. The EU also raised two concerns, and Brazil raised one.

The majority of concerns involving political and national security issues pertain to measures taken by the U.S., which were the subject of 13 complaints, mostly raised by China.

The increase is due to more members joining the WTO over the years, but mainly to the trend of greater protectionism by countries, according to Juan Antonio Dorantes, former economic advisor to Mexico’s Permanent Mission to the WTO and managing partner of Dorantes Advisors, a firm specializing in international trade.

“WTO member countries are increasingly proficient in utilizing the tools provided by trade agreements to defend their market interests,” he notes, observing that as trade expands, so does the number of concerns. “However, we have also seen a growing trend toward protectionism in certain sectors, posing a problem for all exporting countries.”

Mr. Dorantes believes trade concerns impact large commodity exporters equally, as well as industrial goods exporters in general. He argues that in all areas, there may be less technical and more political reasons behind these concerns.

Marina Carvalho, an international trade specialist who was a consultant for the World Bank and chairs the Women Inside Trade program, notes that trade concerns have always existed and have been brought to the WTO. However, the increased use of tools like the CGT relates to the difficulty in other bodies functioning, such as the Dispute Settlement Body.

“The popularity of tools like raising trade concerns at the CGT and other committees grows as members seek alternatives to address these issues, which ultimately yield results,” she said.

For her, the ability to raise such trade concerns at the WTO is advantageous for exporting countries such as Brazil. “This can be a tool Brazil can leverage further if it identifies a measure aimed at environmental protection introducing unfair trade bias, sometimes protectionist and unjustified,” she argued.

Being a commodity exporter, she says, could make more WTO members concerned about Brazil’s environmental protection measures. “That has already been happening, and it’s up to Brazil to demonstrate the extent of its environmental protection policies while ensuring fair trade for its commodities,” she added.

Larissa Wachholz, a partner at Vallya Participações and senior associate at the Brazilian Center for International Relations (CEBRI), observes that the post-pandemic international scenario remains complex, fostering the emergence of trade barriers and complaints involving environmental and national security issues.

“We are experiencing a very difficult global economic moment, combined with China’s economic slowdown, with many countries facing inflationary challenges and complicated geopolitical issues,” she said. “These times encourage the emergence of supposedly technical criteria, although with protectionism elements.”

Looking ahead, Mr. Dorantes anticipates an increase in trade concerns, but also a weakening of WTO. “Donald Trump’s actions could undermine international institutions and dispute resolution mechanisms. If he unilaterally imposes a 5% tariff on imports, for example, it would be a total violation of WTO rules,” he said. The possibility of Mr. Trump launching unilateral actions and that other countries decide to follow suit outside WTO rules, could weaken the entire WTO structure. The paralysis of bodies such as the Appellate Body, with the U.S. blocking the appointment of new judges since 2019, he argues, contributes to raising doubts about not only the functioning but also the very existence of the WTO.

*By Marsílea Gombata  — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Rio forecasts R$3.2bn impact from New Year’s Eve celebrations

City Hall anticipates 5 million attendees at events citywide

12/30/2024

Rio de Janeiro City Hall anticipates that New Year’s Eve 2025 will inject R$3.2 billion into the city’s economy, with an estimated 5 million people attending events across the capital. Copacabana alone is expected to host 2.5 million locals and tourists ringing in the new year.

These projections are part of the second edition of Réveillon em Dados (New Year’s Eve in Data), a study conducted by the Municipal Secretariat for Urban and Economic Development (SMDUE), the João Goulart Foundation Institute (FJG), and the Tourism Company of the Municipality of Rio de Janeiro (Riotur).

According to Thiago Dias, acting municipal secretary for Urban and Economic Development, New Year’s Eve is critical for boosting the city’s economy, which will enter 2025 with thriving bars, restaurants, and hotels filled with domestic and international visitors. “We had an exceptional 2024, with remarkable shows and events, and we’re set to begin the new year just as vibrantly,” said Mr. Dias.

The report, released on Sunday, estimates that 50,000 jobs will be directly or indirectly linked to New Year’s Eve celebrations. On Copacabana’s main stage, a star-studded lineup includes performances by Caetano Veloso & Maria Bethânia, Ivete Sangalo, and Anitta.

Patrick Correa, president of Riotur, expressed optimism about surpassing last year’s milestones. In 2024, New Year’s Eve drew an estimated 5 million attendees citywide and generated R$42 million in services tax revenue—a 66.3% increase compared to the R$25.2 million collected the previous year.

*By Rafael Rosas  — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/
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Supreme Court Justice limits budget allocations but makes exceptions

Flávio Dino authorizes pending committee funds but imposes conditions on future allocations, impacting federal spending dynamics

12/30/2024

Supreme Court Justice Flávio Dino authorized the payment of committee budget allocations committed by December 23, even without disclosing identity of the requester. However, he prohibited new authorized payments unless a lawmaker takes responsibility for the funding request. Despite stern criticism of Congress, Mr. Dino’s decision allows the federal government to commit funds to the healthcare sector without individualized accounts.

“In this case, by partially waiving the mentioned rules, the goal is to ensure legal stability for established institutional and contractual relations,” Mr. Dino said. He added that halting payments for ongoing projects and services could harm other government entities, businesses, and workers.

The new Supreme Court ruling prevents President Lula’s administration from committing R$4.4 billion of the R$15.5 billion in Congressional committee allocations without sponsorship of the funds. According to sources, R$3 billion may remain frozen unless new authorizations are issued. The deadline for committing these funds is December 31, and the unresolved execution could aid the government’s primary fiscal result in 2024.

The new conflict between Mr. and the parliamentarians arose due to the action by a group of Congresspersons, who questioned the sponsorship of committee amendments by parties rather than the thematic committees of the Lower House and the Senate. They argued that there was a deviation of purpose and a reproduction of the so-called “secret budget.”

Coordinated by House Speaker Arthur Lira, party leaders sent a directive to the Executive on December 12 to “ratify” the allocation of R$4.2 billion of these budget allocations, whether already previously authorized or not. Mr. Dino understood that this act contradicted his decision, as the 17 party leaders collectively signed all the allocations.

In the Senate’s case, 11 leaders sent a directive to the government on the 18th to sponsor R$2.5 billion and held committee meetings in the last week before the recess to record voting minutes. In this directive, each allocation is individually identified by a party leader, although they are not exactly the one who decided how the funds would be used.

The first name on the list, for example, is Senator Carlos Portinho from Rio de Janeiro. He sponsored a budget allocation of R$2.2 billion for a Ministry of Tourism project in Abadiânia, Goiás, the hometown of a political ally.

Mr. Portinho acknowledged to Valor that the allocation was authored by another senator and defended this as the correct process for ensuring transparency. “The party leader signs, but everyone knows whose earmark it is. This is transparent, it has an origin, it has a destination,” he argued, rejecting the term “sponsored.” “It is a duty imposed on the leader. I sign the directive. I do not participate in the choice, allocation, or execution.”

This loophole was authorized by Mr. Dino in a decision in November. On Sunday, he said he became aware of the Senate’s directive on Friday, after being informed by the Lower House, and gave the senators ten days to express their views—a period that will allow the government to commit all Senate committee resources.

Omar Aziz said that the Senate followed the rules established in the law approved by Congress. “I don’t think there will be [a freeze]. Making a budget allocation is not a crime. Define where it’s going, and that’s it. Expenditures must be monitored. Who doesn’t fight to bring money to their state? Everyone does. The Senate and House have every interest in ensuring transparency to avoid doubt,” he said.

Mr. Dino also sent “messages” to Congress and called for solutions that address the Supreme Court’s demands. “More than useless threats or carrying out ‘retaliations,’ sincere institutional dialogue and adherence to legal norms are the correct paths to be taken in favor of the Nation’s legitimate interests,” he said.

Justice Dino further said that the public budget does not accommodate the “invention” of allocation types without legal support, that the release was based on “false reasons,” and advocated for a Federal Police inquiry to investigate why lawmakers insist on keeping the author of the funds confidential.

“For a parliamentarian, securing funds for their constituents is commendable, so there is no legal basis or logical justification for such a noble act to be concealed by the opacity of what has come to be known as the secret budget,” he wrote.

Despite the criticisms, Mr. Dino allowed the federal government to authorize health sector allocations even without individualized accounts. His previous decision required specific accounts, but the justice recognized this could harm municipalities with mayors nearing the end of their terms and authorized this exception. However, he maintained the requirement that these accounts be opened for the payment to be effectively made.

The impasse over committee allocations is likely to cause further tensions in the relationship between President Lula and Congress after the recess. For members of the center-right bloc, Mr. Dino’s decision was calculated, as he waited for the voting on spending freeze bills to suspend the payments. This also sustains the suspicions of a legislative faction that the initiative was orchestrated with the government.

However, they argue that the government should be more concerned about the funds’ freeze because it will begin 2025 “entangled” and with pending issues with the Legislative. One possible retaliation is to further delay the voting of the Annual Budget Act (LOA), which was not voted on in December and will only be analyzed by Congress starting in February.

Another possible reaction is to intensify pressure for the next Lower House Speaker, likely Hugo Motta, to advance constitutional amendment proposals (PEC) to transform committee allocations to the budget into individual parliamentary earmarks, with mandatory execution by the federal government, and to prohibit individual Supreme Court justices from suspending laws approved by Congress.

Mr. Lira and Senate President Rodrigo Pacheco did not comment on the decision. Valor learned that the government is unlikely to file a new appeal, given the proximity to the end of the year, and the priority is to focus on committing and paying what is possible in the last two days of 2024.

* By Flávia Maia, Raphael Di Cunto, Marcelo Ribeiro, Renan Truffi, Caetano Tonet  e Murilo Camarotto  — Brasília

Source: Valor International

https://valorinternational.globo.com/
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Brazilians transfer money abroad despite soaring dollar

Executive says the currency’s surge reflects “fearful money” held by conservative investors

12/19/2024

Brazilians are increasingly transferring money abroad, even as the foreign exchange rate reaches record highs—a departure from historical patterns.

Roberto Lee, CEO of Avenue, a brokerage focused on facilitating international investments for Brazilians, notes that traditionally, a rising dollar dampens outflows. However, he observes a unique shift: the currency’s surge is mobilizing “fearful money” held by conservative investors seeking to protect their assets. These investors are favoring U.S. government bonds with short- and medium-term maturities.

“We’ve been attracting a different type of money that accelerates during heightened risk and carries greater value. The pervasive sense of risk has prompted conservative investors to realize, often reluctantly, the need for a structural portion of their investments abroad,” Mr. Lee explained.

Avenue reports unprecedented inflows compared to its seven-year history, with volumes in its international accounts already surpassing November’s total by mid-December. “We expect at least 20% more this month than last,” Mr. Lee added.

Similarly, XP has seen a 25% increase in international account remittances at the start of December compared to the prior month, while foreign investment expert fintech Nomad reports “consistent record-breaking growth, averaging a 7% rise in new investors,” says Investment Director Caio Fasanella.

According to Rodolfo Buim, head of product distribution at XP’s international division, the dollar’s peak and fiscal uncertainties in Brazil have driven clients to accelerate the dollarization of their portfolios as a hedge against volatility. “Diversification into the American market is also a key draw, offering more maturity and historically greater long-term profitability,” Mr. Buim explained.

Mr. Fasanella, from Nomad, attributes the surge to Brazilians seeking stability and recognizing opportunities in U.S. markets.

The current wave of international investment resembles a similar spike during President Lula’s election in November 2022. However, Mr. Lee points out that last year’s surge was fleeting. “This year, we’ve more than doubled assets under custody, with the increase heavily concentrated in the second half of the year,” he said.

*By Marília Almeida  — São Paulo

Source: Valor International

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