09/01/2026
BRAZIL’S DEBT CLIMBS AS STATE-RUN FIRMS POST RECORD DEFICIT
Gross debt reaches 82.5% of GDP, highest since 2021, while federal companies’ shortfall widens nearly 50% through July
Brazil’s general government gross debt, the main gauge of the country’s public debt burden, rose to 82.51% of gross domestic product in July, Central Bank data released Aug. 31 showed. It was the highest level since April 2021, when the ratio stood at 82.62%.
The debt-to-GDP ratio has risen 10.8 percentage points during President Luiz Inácio Lula da Silva’s third term. Lula is a member of the Workers’ Party (PT).
General government gross debt comprises the federal government, the National Social Security Institute (INSS) and regional governments. The ratio rose 0.6 percentage point in July, marking the seventh consecutive monthly increase. In nominal terms, gross debt reached R$10.9 trillion.
Debt drivers
The Central Bank attributed the increase mainly to nominal interest expenses, which added 0.8 percentage point to the ratio, and net debt issuance, which contributed another 0.2 point. Growth in nominal GDP partly offset the increase, reducing the ratio by 0.5 point.
The consolidated public sector — comprising the federal government, states, municipalities and state-owned companies — spent R$99 billion on debt interest in July.
Over the 12 months through July, nominal interest expenses reached R$1.15 trillion, equivalent to 8.67% of GDP. That was up from R$941.2 billion, or 7% of GDP, in the 12 months through July 2025.
Fiscal outlook
Goldman Sachs economist Alberto Ramos said in a report that debt is likely to continue rising given the Lula administration’s “expansionary fiscal stance.”
“The lack of spending control has severely undermined the credibility of the fiscal targets and contributed to an overheated and excessively indebted economy. In addition, a weak fiscal anchor has raised fiscal risk premiums, resulting in the de-anchoring of short- and medium-term inflation expectations,” Ramos said.
Rafael Rondinelli, an economist at MAG Investimentos, said the 10.8-percentage-point increase in the debt ratio under Lula reflects the “sharp increase in spending and the resulting need to keep interest rates at elevated levels.”
Brazil’s Selic base interest rate currently stands at 14%.
Banco Pine projects gross debt will rise to 83.3% of GDP by December 2026 and 87.9% by December 2027.
Gross debt has increased 3.9 percentage points so far in 2026.
State-owned companies
Brazil’s federal state-owned companies posted a record R$8.27 billion deficit from January through July, Central Bank data also released Aug. 31 showed. It was the largest nominal shortfall for the period since the series began in 2002.
The deficit widened 49.8% from R$5.52 billion in the same period of 2025. The Central Bank figures exclude oil giant Petrobras and state-controlled financial institutions such as Banco do Brasil and Caixa Econômica Federal.
Economists see the measure as an important gauge of how state-owned companies affect the public finances.
XP Investimentos economist Tiago Sbaderlotto expects state-owned companies at the federal, state and municipal levels to post a combined deficit of R$10.2 billion in 2026, equivalent to 0.1% of GDP, mainly “due to the performance of [Brazil’s postal service] Correios.” That would be the largest deficit in the Central Bank series.
Sbaderlotto estimates federal companies will account for roughly R$8.2 billion of the shortfall, with state and municipal companies contributing the remaining R$2 billion. XP therefore projects a primary deficit of R$48.2 billion, or 0.4% of GDP, for the consolidated public sector.
“The results of state-owned companies show a similar trend to previous years, with the deficit worsening as a result of a policy of higher spending. Correios is undoubtedly the state-owned company that causes the greatest concern, but we could see problems at other companies in the near future,” Sbaderlotto said.
Gabriel Uarian, chief analyst at Cultura Capital, said “the concentration of the shortfall, particularly at Correios, points to management weaknesses and increases the risk that new capital injections or government guarantees will be needed, putting pressure on the public finances and reducing fiscal room for maneuver.”
Correios losses
Correios posted a net loss of R$5.55 billion in the first half of this year as the postal service undergoes a financial and operational restructuring.
Last year, the company raised R$12 billion in loans from five financial institutions backed by federal government guarantees. The government’s 2027 annual budget proposal, submitted Monday, provides for a R$6 billion federal capital injection into the company.
As a share of GDP, the deficit at federal state-owned companies reached 0.11% in the first seven months of the year, the highest level since 2009, when it stood at 0.12%, with a R$2.13 billion shortfall.
Energy sector
Sara Paixão, a macroeconomics analyst at InvestSmart XP, also highlighted the financial condition of federally controlled energy companies, particularly Eletronuclear, which is facing difficulties related to construction of the Angra 3 nuclear power plant.
Still, Paixão said it is “important to emphasize that a significant portion of the state-owned companies reporting negative results perform strategic functions for the country.”
The Ministry of Management and Innovation in Public Services, Correios and Eletronuclear were contacted for comment but did not respond.
Source: Valor International
https://valorinternational.globo.com/
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09/01/2026
CARBON CAPTURE HUB COULD SERVE ETHANOL INDUSTRY
Company seeks ANP approval to test underground CO2 injection in São Paulo using emissions from sugar-and-ethanol mills
A company founded by former Petrobras and biofuel industry executives has asked the National Agency of Petroleum, Natural Gas and Biofuels (ANP) for authorization to test a project in west-central São Paulo that would capture and store underground the carbon dioxide emitted by the region’s ethanol plants. EnduraCarbon, founded a year ago, plans to capture the CO2 and inject it permanently underground, generating carbon removal credits for companies seeking to offset their greenhouse gas emissions.
The project became possible with the signing of Decree 13095 of 2026 on August 13, which regulates several types of carbon capture, transportation, and storage (CCS) activities provided for under the Fuel of the Future Law.
The decree made the ANP responsible for authorizing projects and regulating the sector. Under the rules, EnduraCarbon’s project falls under bioenergy with carbon capture and storage (BECCS), which uses carbon generated through bioenergy processing or biofuel production.
EnduraCarbon plans to develop a hub with underground carbon injection wells that would receive liquefied CO2 emitted by different mills. Ethanol plants currently release the CO2 generated during fermentation into the atmosphere. Those with biomethane facilities also emit CO2 from the biogas purification process, which separates methane from carbon dioxide.
Calculations by EnduraCarbon’s partners indicate that the hub would require an investment of R$1.5 billion if testing confirms its viability. It could store 1 million tonnes of carbon dioxide a year.
The company spent the past year developing the project and its business model while monitoring CCS technology regulation, CEO Daniel Pedroso said. One of the company’s five partners, Pedroso built his career at the ANP and Petrobras. At the oil company, he held several management positions and most recently headed its CCS operations before leaving with Tiago Homem, now an EnduraCarbon partner and director of projects and technology.
Since founding the company, the partners have studied historical geological and seismic data, including information from wells drilled in the rural areas of São Paulo state by Petrobras and Paulipetro since the 1960s. Their goal was to assess the possibility of injecting gas into saline reservoirs in the state.
“We have been studying the Paraná Basin for CCS opportunities. We saw potential in the bioenergy industry, where we could contribute our expertise,” Pedroso said. The company’s research concluded that the broader Bauru region offers the best conditions for a project of this scale because of both its geology and its proximity to several ethanol plants in São Paulo.
EnduraCarbon has already signed an agreement with Usina São Manoel, located in the municipality of São Manuel, São Paulo, under which the mill will supply the project with CO2 and electricity cogenerated by burning sugarcane biomass.
“Ethanol plants generate biogenic carbon [with a short atmospheric cycle] through ethanol fermentation. There is also a wave of investment [by ethanol plants] in biomethane, which generates additional carbon dioxide,” explained Renan Santos, a former GranBio vice president who is now an EnduraCarbon partner and chief financial officer. The company’s other partners include geologist Renato Darros de Matos, formerly of Petrobras, and Alexsander Costa, formerly of GranBio.
Only one BECCS project is currently under construction worldwide: a project operated by corn ethanol producer FS in Lucas do Rio Verde, Mato Grosso. Scheduled to begin operating in September, the FS project will store carbon emitted by the company’s own plant and account for the removed carbon in the biofuel’s emissions footprint. This will allow FS ethanol to capture more carbon than it emits over its life cycle.
EnduraCarbon’s project is not tied to a single company. Because the hub will not be physically connected to the mills, the carbon will have to be transported there. The plan is to use trucks powered by biomethane, a biofuel with a much smaller carbon footprint than diesel, which the partner mills could supply themselves.
The company also plans to install and operate carbon dioxide liquefaction units at the mills. These units could use electricity cogenerated from sugarcane bagasse to power the liquefaction process, Pedroso explained.
“The project was designed to achieve scale and economic viability. We began talking with mills, and an opportunity emerged for a commercially viable project aligned with major CCS projects worldwide,” the chief financial officer added.
Once the ANP authorizes the studies, EnduraCarbon will have three years to drill wells and conduct testing. If the research confirms that the operation is viable and safe, the company will apply to the ANP for storage authorization. Under the law, companies may operate carbon injection wells for 30 years, with the option of a 30-year extension.
According to Pedroso, the carbon credit market is expected to develop in the coming years as demand grows among technology companies and data centers, allowing credits to be sold under long-term contracts.
Market participants are concerned about how internationally transferred mitigation outcomes (ITMOs)—certificates equivalent to carbon credits that can be exported—will be regulated. The federal government is considering limits on export volumes to ensure an adequate supply of carbon credits for meeting national targets.
Santos said ITMO exports could attract foreign capital. “Because [BECCS] generates an engineered carbon credit [using technology], it is capital-intensive,” he said. According to Santos, the company is in talks with “institutional investors and large companies interested in advancing the climate agenda.”
Source: Valor International
https://valorinternational.globo.com/
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09/02/2026
BANCO MASTER PROBE REACHES SUPREME COURT, FUELING TENSIONS
Federal Police report says banker sought help from a justice before his arrest as court faces dispute over investigation
A Federal Police report made public Tuesday (1) indicates that Supreme Court Justice Alexandre de Moraes was the intended recipient of a series of messages from Daniel Vorcaro, the former owner of Banco Master. In them, the former banker sought intervention and details about the investigation that led to his first arrest, ordered last November. In one message, he allegedly asked Moraes whether he should leave the country. He also allegedly sought protection from the Federal Police and the prosecutor general’s office.
The Federal Police investigation began after a directive from Justice André Mendonça, who is overseeing the Banco Master case, instructing investigators to determine who received messages sent by Vorcaro. Mendonça requested that the prosecutor general’s office respond to the report. Prosecutor General Paulo Gonet—also mentioned in the document—then argued that the Federal Police report should be dismissed. Gonet stated that justices are not responsible for making accusations or “conducting pretrial investigations.”
The investigation revealed that the exchanges were on a former banker’s cellphone, with a contact named “Alexandre de Moraes BRASÍLIA.” The details had been sealed but were made public by Mendonça, who asked the Supreme Court to review the report in a public session.
Vorcaro asked in a message on November 15, “Were we able to do anything? Do you think I need to be out of the country by Monday?” Two days later, Judge Ricardo Leite of the 10th Federal Court in Brasília ordered the banker’s first arrest. The case was initially under seal in a lower federal court before being transferred to the Supreme Court.
The exchange indicates that Vorcaro suspected he might be arrested and knew parts of the investigation, even though the case files were not public. One indication is that the former banker already knew the case was before Leite, whom he referred to in one of the passages identified by the Federal Police. “Right in the week when I’m sorting everything out. That same Judge Ricardo?” Vorcaro asked on November 15.
Based on other messages attributed to the banker, he requested Moraes to intervene with Federal Police Director General Andrei Rodrigues and Prosecutor General Paulo Gonet. “Can’t we reverse this with Paulo or Andrei? This is really messed up,” Vorcaro allegedly told the Supreme Court justice on November 15 last year.
The former banker also allegedly sought legal guidance from Moraes. In one message, he said his defense team was considering filing petitions to determine whether there were ongoing investigations involving Master. He then asked whether the idea should be pursued. “I’m not going to make any move you don’t think would be productive. We’re in the dark.”
Another contact shortly before the decision resulted in his arrest. “Do you believe there’s any chance this will happen tomorrow morning?” Finally, on November 17, the day of his arrest, the former banker sent another message: “Any news? Were we able to find out anything or stop it?”
Federal Police investigators also identified nine occasions on which Moraes and Vorcaro allegedly met in person. The first meeting reportedly took place on March 13, 2024, and the last on Aug. 8, 2025. Investigators mapped the meetings through conversations in which other people referred to them.
The Federal Police report also says metadata from a R$131 million legal-services contract between Vorcaro and the law firm of Moraes’s wife, Viviane Barci de Moraes, identifies a username linked to the justice as the author of the last change made to the draft.
Messages show that Vorcaro treated the agreement with the law firm as a priority. In one exchange, dated March 15, 2024, the banker demanded urgent action after employees were late making one of the payments under the agreement.
In a message to Angelo Silva, the former banker wrote that it was the “most important contract we have. I asked you not to let this happen. Unreal. We’re going to have problems. Pay it now.”
The Master owner then sent another message to an employee identified as “Romy Banco Master,” saying payment to the firm could not be “a day late” because “it is the most important payment we have.” He added that the payment could be made “without an invoice” and completed later “however necessary.”
Investigators also identified a draft of a second proposed agreement between Vorcaro and the law firm of Moraes’s wife, valued at R$50 million. The document, dated May 2025, provided for the former banker to pay for the services by transferring ownership of two aircraft.
Viviane Barci’s law firm issued two statements. In one, it said the R$131 million contract had been submitted to Moraes for assessment of any potential conflicts or legal impediments. However, the firm denied that a R$50 million contract existed. “Banco Master’s proposal was not accepted, nothing was signed, and the original contract was terminated when the bank was liquidated, ending any relationship with the institution.”
Prosecutor general drawn into Master messages
Gonet is also mentioned elsewhere in the Federal Police report. Investigators said Vorcaro communicated with the prosecutor general through intermediaries, with contacts allegedly facilitated by lawyer Ciro Soares, who represented the former banker.
In conversations from March 2025, Gonet allegedly asked Soares to pass messages to Vorcaro saying he missed the former banker, and to offer compliments after plans for a trip to London were confirmed.
On March 15, 2025, Soares sent Vorcaro a photograph of himself with Gonet, along with a message asking the former banker to call because the prosecutor general wanted to speak with him. The report then records four voice calls between Vorcaro and Soares, each lasting a few minutes.
Days later, on March 28, the lawyer sent three messages that he said he was forwarding at Gonet’s request. In them, the prosecutor general allegedly wrote: “Great! I’m rooting for you guys!”; “I already miss you! I’m boarding a flight to Rome”; and “Send him this message.” Vorcaro replied: “Thank him very much for the affection. I miss him too, let’s arrange to get together.”
Soares then wrote: “He adores you.” “He’s going to London with us,” he added, before forwarding another message, again attributed to Gonet: “Great!!! I hope there’ll be cigars and Macallan!” Vorcaro replied: “Now we’ll need a cigar plantation and a barrel of Macallan hahaha.”
The following day, according to messages highlighted in the Federal Police report, Soares told Vorcaro that “Gonet asked whether his son can go to London with us.” The former banker responded positively: “Obviously.” The lawyer then forwarded another message attributed to Gonet: “You’re a machine LOL.”
According to the report, Vorcaro received a list from an employee containing names of people “to go to London with expenses paid by us.” The Master owner did not agree with the list but made an exception for “Pedro and Ciro,” whose expenses would be covered, an apparent reference to Pedro Gonet and Ciro Soares.
The event in London was a whisky tasting that the Federal Police director general also allegedly attended.
Justice sends dispute to full Supreme Court
In Tuesday’s decision to make the document public, Mendonça asked the full Supreme Court to consider the report in a “public and transparent” session. He is expected to formally submit the case for consideration next week. Supreme Court President Edson Fachin will then decide when to schedule it. Contacted for comment, Fachin did not respond.
Without mentioning Moraes, Mendonça suggested the existence of an alleged monitoring and influence network that might have been working to benefit Banco Master. He added that, based on the exchanges found by the Federal Police, “the natural progression of these proceedings is to the plenary of this Supreme Court, the sovereign body responsible for thoroughly examining the new evidence presented by the police in a strictly legal and technical manner.”
Moraes and Mendonça met to discuss the case before the Federal Police report was made public. People familiar with the conversation described the meeting as “very tense.” Moraes allegedly questioned whether Mendonça had allowed the Federal Police to investigate him and accused his colleague of steering the investigation. Mendonça, in turn, was said to have asked Moraes how he had learned that investigators were digging deeper into the case.
Prosecutor general seeks to invalidate police report
In his filing with the Supreme Court, Gonet asked that the Federal Police report be declared invalid. “The justice overseeing the case does not even have the authority to direct police action against targets he decides to pursue. At the pretrial stage, investigations are conducted by the judicial police, while the Public Prosecutor’s Office, as the prosecuting authority with exclusive power to bring criminal charges, may also seek evidence on which to base its conclusions.”
Gonet asserted that Mendonça was aware the investigation would involve officials eligible for direct trial by higher courts, including Moraes. “He knew Moraes was among them. He could not have failed to know that. The directive for the Federal Police investigation is dated August 24, 2026. By that date, the judge handling the case already possessed all the detailed material he needed in writing.”
Gonet argued that Mendonça actively sought evidence that Moraes may have been involved in wrongdoing. “Regardless of the extent to which the measure constitutes an investigation, it is undeniable that there was an examination of material in the case aimed at finding evidence of Justice Alexandre de Moraes’s involvement in unlawful acts.”
The prosecutor general further argued that by ordering investigative material to be examined regardless of which authorities it involved, Mendonça effectively imposed an investigation on Moraes. The result, he said, was a 218-page Federal Police report, “nearly 190” pages of which concern the justice.
Moraes, Mendonça, Fachin, the Federal Police and Vorcaro’s defense team did not respond to requests for comment.
Source: Valor International
https://valorinternational.globo.com/
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09/02/2026
SELECTIVE TAX DECREE COULD BRING LIST OF INDUSTRIALIZED PRODUCT EXEMPTIONS
Current IPI is expected to be restricted to the Manaus Tax Free Zone and apply to just 5% of industrial goods
The Lula administration’s economic team is considering publishing the list of products that will be exempt from the Industrialized Products Tax (IPI) on the same day it sends the provisional presidential decree (MP) on the Selective Tax (IS) to Congress. The IPI will be replaced by the Selective Tax in 2027. The tax will not disappear entirely, however, because it will still be levied on a small list of items to preserve the competitiveness of the Manaus Tax Free Zone (ZFM).
The two measures are eagerly awaited by companies because they can clarify exactly how these taxes will work next year. The consumption tax reform provides for the IPI rate to be reduced to zero starting in 2027 for all products except those produced in the ZFM. The IPI is expected to apply to only 5% of industrial products in the country, with the rate set at zero for the rest.
Supplementary Law 214, which regulates the consumption tax reform, requires the Executive branch to publish a detailed list of products that will have a zero IPI rate starting in 2027. The Federal Revenue Service has promised the publication since the end of May, but its release was delayed by the preparation of the Annual Budget Bill (PLOA) and uncertainties surrounding the Selective Tax.
The strategy now is to publish the list alongside the Selective Tax MP this month, in September. The goal is to link a measure considered negative by one faction of the government—taxing goods and services harmful to health or the environment through the Selective Tax—with a positive one: reducing the IPI rate to zero for about 95% of industrial goods produced in the country.
The decision has not yet been finalized, however. Part of the government’s political wing continues to argue that the Selective Tax MP should be postponed until after the elections, fearing its electoral impact, even though the tax would not represent an increase in the tax burden on the affected sectors. In that case, the IPI details could be released first and the Selective Tax later.
Changes to state and municipal transfers
On Monday (31), Finance Minister Dario Durigan reiterated that the rates proposed for the Selective Tax will take into account the same tax burden that the sectors affected by the new tax currently pay in IPI. “The Selective Tax projection takes into account the IPI burden that exists today, as I am negotiating with the sectors, maintaining the commitment not to increase the tax burden,” the minister said.
In the 2027 budget proposal, the government estimated that IPI revenue will amount to just R$5.497 billion, since the tax will be levied only residually to preserve the competitiveness of the ZFM, which generates tax credits. By comparison, the government expects to collect R$99.99 billion from the IPI this year, according to the latest bimonthly report on the assessment of revenues and expenditures in the 2026 budget.
The remainder of today’s IPI revenue was allocated for 2027 between the Selective Tax and the Contribution on Goods and Services (CBS), which will also replace the Social Integration Program/Contribution for Social Security Financing (PIS/Cofins) and the Tax on Financial Operations (IOF)-Insurance. The government estimates it will collect R$636.8 billion from the CBS in 2027 and R$42 billion from the Selective Tax. The figures may change depending on the rates ultimately set for the new taxes.
Revenue from the Selective Tax is much lower because, per the consumption tax reform, it applies only to products and services harmful to health and the environment, rather than to all products currently subject to the IPI.
Tax lawyer Luiz Gustavo Bichara, founding partner of Bichara Advogados, believes the government, “for political reasons and due to disorganization,” has not yet submitted the bill establishing the Selective Tax rates. “And now it will distort the purpose of the decrees, which should be issued in situations of urgency,” he said.
In his view, the delay in setting the rates creates legal uncertainty and makes it harder for companies to plan for next year. It also hampers efforts to attract potential new foreign investors. “How can someone establish themselves in a new country without knowing how much tax they will pay?” Bichara asks.
On the spending side, the near-elimination of the IPI will require the federal government to spend R$33.8 billion in 2027 to compensate states and municipalities for the end of the tax. The amount was also included in the 2027 budget proposal—equivalent to 0.2% of GDP.
The compensation will be necessary because the government shares part of IPI revenue with states and municipalities. In 2027, however, total IPI revenue will be replaced by the Selective Tax and the CBS, and only Selective Tax revenue will be shared with subnational governments, while CBS revenue will remain entirely with the federal government.
Because of that, the tax reform provides for compensation through a constitutionally mandated transfer to states and municipalities. To arrive at the R$33.8 billion figure, the government calculated the difference between what is currently transferred to states and municipalities through the IPI and what will be transferred through the Selective Tax. That difference became the budgetary compensation subnational governments will receive in 2027.
A government official told Valor that if the Selective Tax is significantly weakened during its consideration by Congress, compensation to states and municipalities will have to increase. Likewise, if the Selective Tax is strengthened, the amount will be reduced.
The R$33.8 billion transfer was classified in next year’s budget as a primary expenditure, meaning it is included in the calculation of the primary balance for purposes of meeting the fiscal target. At the same time, it was excluded from the year’s spending limit and classified as expenditure not subject to the cap.
Source: Valor International
https://valorinternational.globo.com/
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09/02/2026
SUPREME COURT CRISIS ADDS NEW UNCERTAINTY TO BRAZIL ELECTION
Analysts see risks for Lula and an opening for Flávio Bolsonaro, but say scandal-weary swing voters may prove harder to move
With a month to go before the first round of Brazil’s presidential election, the disclosure Tuesday (1) of messages involving Supreme Court Justice Alexandre de Moraes and former Banco Master owner Daniel Vorcaro is set to become a new factor in the race. The messages show the former banker seeking Moraes’s help and information about a confidential investigation that would eventually lead to Vorcaro’s arrest.
Analysts say the new Supreme Court crisis could energize the base of Liberal Party presidential candidate Flávio Bolsonaro and damage President Lula’s reelection bid. At the same time, candidates seeking to break through the country’s political polarization could also benefit.
Rafael Cortez, a political scientist and partner at consultancy Tendências, sees potential damage to Lula’s candidacy because an association between the president and the Supreme Court has increasingly taken hold in public opinion. Any negative effect, however, will depend on the opposition’s ability—particularly Flávio’s campaign—to deepen that perception.
“I see a potentially negative effect, but it is not a given. Strategically, Flávio’s campaign will have to exploit the issue politically so that voters do not turn the feeling that ‘the mainstream is corrupt’ into abstention, but instead into a vote for the opposition candidate.”
Cortez said the episode could hurt the government because some voters perceive an “informal alliance” between Lula and Supreme Court justices that has resulted in the persecution of Bolsonaro supporters. He therefore believes Flávio is likely to be able to capitalize politically on the issue, since his political movement was the first to embrace an anti-establishment message.
Cortez considers the election open and believes voter turnout will determine the outcome. In that context, the Supreme Court episode could motivate some voters dissatisfied with Lula who might otherwise stay home to turn out and vote. “The chances of major changes in the current landscape are low, but in a close election, small shifts are enough to change the outcome.”
The analyst said Lula faces a paradox: despite high disapproval ratings for his government, he remains ahead in voting intentions. Cortez said the explanation lies more in the opposition’s mistakes than in Lula’s own strength.
“If the government had positive approval ratings, we could say nothing would happen [as a result of developments in the Banco Master case at the Supreme Court], but that is not what is happening. The government’s position as favorite rests on shaky foundations and reflects voters’ lack of confidence in the opposition more than support for the president. He is leading, albeit by a narrow margin, despite voters not liking his government.”
With part of the electorate tired of polarization and lacking motivation to turn out, Cortez said the new allegations involving the Supreme Court could draw some of those voters away from abstention and toward Flávio. The political scientist noted that the senator is also the target of investigations related to the Banco Master case pending before the court. “What we are seeing, ultimately, is how the Supreme Court has become drawn into Brazil’s political radicalization. In voters’ eyes, the justices themselves have become political figures.”
Cortez said the episode could lead even some voters who have reservations about Flávio to conclude that criticism from Bolsonaro supporters about the court’s conduct may have some basis. “That could lead voters who disapprove of the government to migrate toward Flávio, making the race even more evenly matched,” he said. Lula’s campaign, Cortez added, could counter the issue by emphasizing its economic agenda, including a proposal to end the six-day workweek with one day off and its message of protecting lower-income Brazilians.
Other opposition candidates could also benefit if they manage to tap into anti-establishment sentiment among part of the electorate, Cortez said. “Those who are using criticism of the Supreme Court as an electoral strategy are likely to gain. Whether that will be enough to turn the race around is another matter.”
Graziella Testa, a political scientist and professor at the Federal University of Paraná, said previous political scandals suggest that the impact of cases like this depends less on the facts themselves than on which narrative ultimately takes hold and who comes to be seen as the “villain” or the “hero.”
Testa said Flávio, who has publicly maintained a confrontational stance toward Moraes, is likely to seek electoral dividends from the episode. She cautioned, however, that there is no automatic link between the case and any change in voting intentions.
According to Testa, criticism of the Supreme Court and some of its justices remains largely divided along partisan lines, particularly among groups on the right. “I don’t think someone who doesn’t know who they are going to vote for is worried about the Supreme Court. This is an issue that mobilizes committed right-wing voters,” she said.
When asked about a possible response from Lula, Testa declined to predict the campaign’s strategy. Based on the president’s previous statements, however, she said Lula would likely argue that the investigation should be allowed to run its course before responsibility is assigned. “He is very likely to say he will wait for the outcome to determine whether anyone should be held responsible,” she said.
Testa also sees little chance that the campaign will turn the case into an in-depth debate about institutional changes to the judiciary or the Supreme Court. Although proposals along those lines may appear in campaign rhetoric, she believes electoral dynamics are more likely to encourage the personalization of the conflict.
“The campaign is very short and needs very precise messages. I think it is more likely there will be a calculation around personalization because that generates more attention and tends to produce a greater electoral payoff.”
Christopher Garman, managing director for the Americas at Eurasia, said the episode is more damaging to Lula because it overshadows issues the government had hoped to highlight positively at this stage of the campaign. The damage may be softened, however, by a widespread perception that corruption is associated with both the Workers’ Party and Liberal Party candidates.
“Voters do not see either of them as credible on corruption. The case [involving Moraes and Vorcaro] does not directly affect President Lula. Still, it is bad for him because it brings a more negative agenda and heavy news coverage at a time when the Workers’ Party campaign wants to highlight measures it says have improved people’s lives. Since neither Flávio nor Lula has credibility on corruption, that softens the direct impact [on Lula], but negative news is bad for the incumbent,” he said.
According to Garman, the scandal hit just as the government was trying to highlight its accomplishments, including the vote on a proposal to end the six-day workweek with one day off. “Voters are pessimistic about the future. And you don’t want pessimistic voters when you are seeking reelection [as Lula is]. But I don’t see this as a factor that changes the probabilities in this election.”
The allegations also competed for attention with the revelation that Vorcaro transferred more money than Flávio had previously acknowledged toward “Dark Horse,” a biographical film about Jair Bolsonaro. Garman said “it is not easy for Flávio” to distance himself from that episode. At the same time, the Eurasia analyst sees broader institutional consequences. “The scandal deepens the crisis at the Supreme Court and puts enormous pressure on Moraes.”
Carlos Melo, a political scientist and professor at Insper, urged caution in assessing the electoral impact, saying “today’s scandal is forgotten when tomorrow’s scandal arrives.” In his view, the economy and public security are the issues that most concern voters, meaning other matters may carry only marginal weight.
Independent voters are unlikely to be mobilized by Tuesday’s revelations, Melo said, because there is already fatigue with successive waves of allegations affecting both sides. “Voters inside each political bubble defend their own side at any cost and attack the other. Independent voters, meanwhile, are starting to look at all of this with a certain disdain. Bombs keep being thrown from one side’s backyard into the other’s, and one ends up canceling out the effect of the other.”
Source: Valor International
https://valorinternational.globo.com/
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09/04/2026
SUPREME COURT JUSTICE SEEKS PROBE OF COLLEAGUE AS CRISIS DEEPENS
Alexandre de Moraes’s request alleges abuse of authority and political targeting after André Mendonça unsealed a report citing messages from former Banco Master owner Daniel Vorcaro
Supreme Court Justice Alexandre de Moraes has asked for fellow Justice André Mendonça to be investigated for alleged abuse of authority, administrative misconduct and impeachable offenses.
Moraes also accuses his colleague of compromising judicial impartiality and favoring political groups in investigations into Banco Master and fraud involving Brazil’s National Social Security Institute (INSS).
The request, sent to Supreme Court Chief Justice Edson Fachin, came two days after Mendonça unsealed a Federal Police report citing messages sent by former banker Daniel Vorcaro, Banco Master’s owner, to a contact attributed to Moraes. In the messages, Vorcaro sought to interfere with and obtain information about investigations that led to his arrest in November last year.
The episode triggered an unprecedented crisis at the Supreme Court, which has now intensified with the request for an investigation into Mendonça.
Mendonça did not immediately respond to requests for comment.
Call for investigation
Moraes used the so-called fake news inquiry, which he has overseen since 2019, as the basis for requesting the investigation.
In the decision sent to Fachin, Moraes said he ordered Federal Police Director-General Andrei Rodrigues on Tuesday (Sept. 1) to provide intelligence reports produced “in response to the need to document numerous irregularities and illegal acts” in the handling of Operation “Sem Desconto”, involving the INSS, and Operation Compliance Zero, involving Banco Master. The decision does not make clear whether the Federal Police produced the reports on its own initiative.
Moraes said the irregularities identified by the Federal Police indicated that Mendonça sought to “steer the production of evidence toward falsely accusing Supreme Court justices of crimes, expressly naming Justices Gilmar Mendes, Dias Toffoli, Luiz Fux, Alexandre de Moraes and Nunes Marques, as well as the prosecutor general and the director-general of the Federal Police.”
The information provided would also have shown a series of alleged irregularities, Moraes said, including the “usurpation” of the police authorities’ “control over the investigations,” improper handling of plea-bargain negotiations and the steering of investigations toward specific targets for political reasons. Those alleged targets included Moraes himself and Senate President Davi Alcolumbre (Brazil Union Party).
Evidence challenge
In addition to potentially leading to an investigation into Mendonça, Moraes’s request could result in evidence gathered in the Compliance Zero and Sem Desconto operations being invalidated.
Among other issues, Moraes challenges the chain of custody of the evidence — the set of procedures established under Brazil’s Code of Criminal Procedure governing how evidence collected in criminal cases must be handled, preserved, processed, stored and disposed of.
Moraes argues, for example, that measures ordered by Mendonça, such as granting early access to raw data extracted from devices before the Federal Police had filtered the material and verified its authenticity, breached the chain of custody and harmed “the criminal investigation, including by allowing several leaks.”
He said a Federal Police intelligence report found that Mendonça’s decisions in the two cases could, in theory, have amounted to “usurpation of the police authorities’ control over the investigations, with a clear loss of impartiality due to ‘growing indications of bias in the conduct of judicial oversight, reflected in increasingly intense thematic steering toward a specific investigative line,’ as well as a breach of the chain of custody of the seized evidence.”
Moraes also accuses Mendonça of acting for personal and political reasons. One indication, he argues, is that Mendonça allegedly steered the investigation toward particular targets, including Alcolumbre. Moraes also refers to himself in the third person in several passages of the decision.
“The Federal Police points to several actions by the reporting justice, André Mendonça, that, in theory, constitute administrative misconduct, impeachable offenses and abuse of authority, including the targeting of specific individuals for investigation for personal and political reasons, in an attempt to incriminate Justice Alexandre de Moraes and Senator Davi Alcolumbre,” one passage of the decision says.
Moraes says neither the Federal Police nor the Prosecutor General’s Office (PGR) accused him of committing crimes. He argues that Mendonça therefore sought to investigate him in an effort to uncover criminal offenses that could be used against him.
Fachin’s review
Shortly after Moraes’s order became public, Fachin requested information from Moraes, Mendonça, the PGR and the Federal Police about the report citing Vorcaro’s messages.
The measures are intended to establish the full circumstances surrounding the production of the report ordered by Mendonça on conversations found on Vorcaro’s phone that exposed his relationship with Moraes.
The chief justice wants to review all the information before submitting the report to the Supreme Court’s full bench to discuss what steps should be taken, including the possibility of opening an investigation into Moraes.
Among the information Fachin requested were details on compliance with the Judiciary Organic Law, any access to private documents or confidential information, and the circumstances surrounding a police operation. Fachin also wants clarification on the conditions under which Mendonça ordered the report to be produced.
Police presence
Before the crisis escalated, the court’s longest-serving justice, Gilmar Mendes, said he had suggested to Fachin that Federal Police officials be barred from working in justices’ chambers.
Mendes said such arrangements tend to influence the handling of investigations overseen by Supreme Court justices. He also said he considered such close relationships between investigators and judges inappropriate.
Four Federal Police officials currently work at the Supreme Court. Two are assigned to Mendonça’s chambers. Moraes is also assisted by one, while another works in the court’s security division.
On Thursday (Sept. 3), as he left the Senate chamber, Alcolumbre was asked about Moraes’s request concerning Mendonça. He said he was unaware of the decision.
“I don’t know anything about it. I don’t know what the decision was,” he said.
Source: Valor International
https://valorinternational.globo.com/
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09/08/2026
RETAILERS TIGHTEN CREDIT AS EARLY DELINQUENCIES RISE
Six major chains keep lending growth below inflation and provisions broadly stable, but shorter-term arrears are increasing faster than overall delinquencies
Brazil’s largest retail chains have kept a tight rein on credit this year, limiting financing to customers to protect themselves against the risk of consumer defaults. The strategy has helped prevent a rise in provisions for credit losses.
Six retailers with combined annual gross sales of just over R$120 billion had R$40 billion in consumer credit outstanding in the first half, Valor calculations show. In real terms, after adjusting for inflation, their combined loan book shrank 1.2%.
Despite the conservative approach, this year’s figures show that shorter-term delinquencies, of up to 90 days, are rising faster than overall overdue balances—a potential warning sign for retailers.
Credit restraint
The findings are based on a Valor survey of first-half financial statements from publicly traded fashion, electronics and sporting-goods retailers. The analysis covered provisions for doubtful accounts, total overdue balances, delinquencies of more than 90 days and the size of each company’s overall credit portfolio in Brazil.
The companies included home-appliance, electronics and furniture retailer Casas Bahia, omnichannel retailer and marketplace Magazine Luiza, Grupo SBF’s sporting-goods retail chain Centauro, and fashion retailers C&A, Renner and Riachuelo. Valor selected them because they are the publicly traded retail groups with consumer-finance operations. Food retailers and drugstore chains generally do not offer longer-term installment plans.
The six chains had a combined credit portfolio of R$40.95 billion at the end of June, up 3.43% from a year earlier. That was below the 4.64% inflation rate over the same period, as measured by the IPCA consumer price index.
Provisions for doubtful accounts were virtually unchanged at R$3.7 billion. They were stable or lower at Magazine Luiza, Casas Bahia, Renner and Centauro, while increasing at C&A and Riachuelo.
Total overdue balances across the retailers rose 6.7% from a year earlier to R$9.81 billion in the first half.
That increase was faster than the rise in accounts overdue by more than 90 days. In that category, outstanding balances grew 3.5% to R$6 billion, broadly in line with the expansion of the overall credit portfolio.
The figures suggest that more recent delinquencies are putting greater pressure on the overall level of late payments.
Looking at individual companies makes the deterioration in consumers’ ability to keep up with payments more apparent.
Early arrears
At fashion retailer Renner, for example, balances overdue by 31 to 89 days rose 14.8% to R$1.5 billion. By contrast, amounts overdue by up to 30 days fell 7.6% from a year earlier.
“This suggests that consumers start paying for a recent purchase and then, after the first month, begin falling behind on installments,” said a former commercial director at a department-store chain.
At Centauro, balances overdue by 31 to 60 days increased twelvefold to R$4.7 million. In the 61-to-90-day range, the amount quadrupled to R$3.1 million, the company’s so-called aging list shows (the figures are net of provisions for expected credit losses). The figures are net of provisions for expected losses.
For comparison, the total amount more than one day overdue also rose sharply, though at a slower pace. It more than tripled, from R$5.1 million in June 2025 to R$16.8 million in June 2026.
Casas Bahia, which has been under court-supervised restructuring since August, has long relied on installment financing as one of its strengths. The company saw overdue balances on its store-financing plans rise 34.5% in the 61-to-90-day range. Amounts overdue by 31 to 60 days increased 27.1% in the first half of 2026 from a year earlier.
Among all the delinquency periods analyzed, ranging from six to 180 days, those two brackets showed the steepest increases in overdue Casas Bahia installments.
Overall delinquencies in the retailer’s credit portfolio rose at a slower pace, though the increase was still significant. Total overdue balances climbed 24.7% to R$1.7 billion in the second quarter of 2026 from a year earlier.
In its financial statements, Casas Bahia said it continues to monitor conditions cautiously and maintain a conservative approach, “ensuring the strength and sustainability of the portfolio.”
The retailer told Valor that delinquencies had risen more sharply in the early and intermediate stages, but said lower insolvency rates at longer maturities were a positive sign. It also said its delinquency rate increased from 8.4% in the second quarter of 2025 to 8.9% a year later, an increase it views as broadly stable.
Conservative lending
Renato Donatti, a senior director at Fitch Ratings, said Brazilian retailers have tightened lending standards in recent years after higher interest rates drove up the cost of capital. The aim has been to avoid taking on excessive default risk, a strategy that has helped keep the sector’s credit portfolios from becoming unbalanced.
Some retailers operate their own finance companies, while others have partnerships. Renner owns Realize, Riachuelo operates through Midway, and Magazine Luiza holds 50% of Luiza Cred, with Itaú Unibanco owning the other half. Among privately held chains, department-store chain Pernambucanas owns Pefisa.
Still, Donatti said store financing remains one of the few sources of credit available to some consumers.
“There is a consumer who is outside the banks’ radar, and retailers need to provide capital to that person for the sale to happen. The issue is that a more conservative approach became necessary, especially among finance companies linked to retailers,” he said.
Donatti expects these businesses to remain cautious when originating credit, adjusting limits and repricing risk while continuing to prioritize asset quality and profitability.
Riachuelo strategy
At Riachuelo, which Fitch sees as currently having a less restrictive credit policy than its peers, provisions for doubtful accounts rose faster than the average among the six retailers surveyed.
Its 15-to-90-day delinquency rate, however, was stable from April through June at 3.8%, while the rate for balances more than 90 days overdue increased from 26.8% to 28.4%.
Net provisions after recoveries and discounts represented 5.1% of the total portfolio, compared with 5.3% a year earlier. The slight decline in the ratio reflected faster growth in the portfolio.
“This result highlights improved provisioning efficiency as the portfolio expands,” Riachuelo said in a statement to Valor.
Asked whether it would maintain its strategy in the near term despite high interest rates and heavily indebted households, Riachuelo said improvements in its credit models allow it to expand lending. The company pointed to better delinquency indicators at shorter maturities, in contrast with some other chains.
“We intend to maintain this dynamic, while still taking a conservative stance, adjusting supply based on our reading of the market and the performance of new vintages.”
C&A provisions
C&A increased its provisions against credit losses by 22%, from R$52.1 million in June 2025 to R$63.7 million a year later, while its credit portfolio grew 6%. Total overdue balances increased slightly faster, by 7.3%.
Credit-card delinquencies reached 15.4% from April through June, the highest level since the third quarter of 2024 for balances more than 90 days overdue.
Still, the company’s overall delinquency rate fell to 4.4% in the second quarter of 2026 from 4.8% a year earlier. Net credit losses after recoveries also edged down 0.9%.
Asked whether it planned to maintain tighter lending standards, C&A gave no indication of a shift.
“We have internal models that help us forecast future delinquency and, based on that, since last year we have made adjustments to our lending policy in anticipation of this deterioration in the macroeconomic environment,” the company said in a statement to Valor.
C&A added that it seeks the best possible balance between serving customers and protecting profitability. Its figures show net revenue rose 1% in the first half, while gross margin increased 1.5 percentage points to 57%.
Sales trade-off
Retailers could theoretically expand credit to support a stronger sales recovery this year. All major publicly traded fashion chains saw revenue growth slow during the World Cup quarter.
For now, however, the high cost of getting that decision wrong has pushed the option aside.
Renner said in a statement that a more aggressive lending policy could provide some short-term benefit to sales, but that the gain would not compensate for greater vulnerability in a difficult macroeconomic environment. The company said conditions would need to improve consistently before it reconsidered its policy.
The fashion retailer kept its credit assessments cautious this year, helping reduce its portfolio by 1% from a year earlier to R$6.4 billion as of June. Its provisions for doubtful accounts were also stable.
But the more recent portion of its delinquent portfolio deteriorated: balances overdue by 31 to 89 days rose from 20.9% of the relevant portfolio in June 2025 to 24.2% in June 2026.
“We remain conservative in extending credit. Although delinquency is under control and our short-term indicators remain healthy, the macroeconomic environment still calls for caution, particularly among the most financially pressured income groups,” the company said.
Magalu portfolio
Magazine Luiza has taken a broadly similar approach. Its credit portfolio grew just 1.8% from a year earlier to R$20 billion as of June, below inflation, while provisions declined 0.9%.
Total overdue balances also accounted for a smaller share of the portfolio, falling by just over 10% in a year. Unlike at the other retailers, short-term delinquencies of 15 to 90 days declined.
The cautious credit stance has an impact on sales, given the sector’s heavy reliance on financing to support growth. But for Magazine Luiza, that trade-off is consistent with its current strategy of pursuing growth while prioritizing profitability.
Source: Valor International
https://valorinternational.globo.com/
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09/09/2026
ACLARA, JAPAN’S JOGMEC PARTNER ON BRAZIL RARE EARTH EXPLORATION
Partnership will be structured through the Canadian company’s new Brazilian subsidiary
Canadian mining company Aclara Resources announced Tuesday (8) that it has signed a contractual joint venture agreement with the Japan Organization for Metals and Energy Security (Jogmec) to explore and develop deposits of heavy rare earth elements in ionic clays in Brazil. The partnership will be structured through a new Brazilian subsidiary of the Canadian company.
In a market filing, Aclara clarified that the Carina project, its flagship asset in the state of Goiás and scheduled to begin operations in 2028, will remain outside the joint venture and continue to be wholly owned by the company.
Jogmec is responsible for securing strategic natural resources for Japan and is the same organization that signed a memorandum of understanding with the government of Goiás in March to cooperate in the research, technology, and exploration of critical minerals and rare earths. That same month, the state signed another agreement of this kind with the U.S., a memorandum that was questioned by members of the federal government.
Under the agreement with Aclara, Jogmec will exclusively finance up to $3 million in exploration expenses during an initial three-year earn-in period. If certain conditions are met, the Japanese organization may elect to invest an additional $1.5 million, extending the investment period by another year.
Jogmec will also have the option to acquire a 30% stake in one of Aclara’s exploration projects in Brazil if it fulfills all of its financial commitments. Once the 30% partnership is established, all future development costs for the selected project will be shared proportionally by the two partners, according to Aclara’s statement.
If it exercises the option to acquire the 30% stake in the selected project, the Japanese organization will also secure the right to purchase an amount of production equivalent to its 30% stake, plus an additional 10% share of the project’s future output. The purchases will be made on normal commercial market terms to support the project’s long-term financing and development.
According to Aclara, Jogmec may also transfer its stake and associated purchase rights to one or more Japanese companies or consortia, subject to the terms and conditions of the joint venture.
“The agreement also creates a natural pathway for future offtake agreements with Japanese companies through Jogmec’s priority rights,” Aclara CEO Ramón Barúa said in a press release. “As new discoveries are made, they have the potential to strengthen the resource base supporting our company’s vertically integrated rare earth supply chain.”
Source: Valor International
https://valorinternational.globo.com/
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09/09/2026
BRAZIL’S TOP COMPANIES URGE FISCAL REFORM AND TAX OVERHAUL
Executives at Valor 1000 winners say fiscal adjustment, greater predictability are essential for investment and growth
Two recurring issues on the corporate agenda have taken on greater urgency. One is the consumption tax overhaul, which enters a new phase in 2027 and aims to implement a simpler, more efficient system—which has long been needed—by 2033. The other is the adjustment of public finances, another essential item on the agenda, which is in a different position: its implementation remains uncertain, despite being part of the election debate.
These two issues, which have always been crucial to the quality of Brazil’s business environment, rank among the main concerns of the country’s largest companies, according to the Valor 1000 ranking, whose winners were honored Tuesday (8) at an event at the Unique hotel in São Paulo.
Serasa Experian compiled the ranking in partnership with Valor and Época Negócios. FGV/SP’s Center for Financial Studies validated the survey criteria.
The resilience of Brazilian companies, which continued to grow revenue despite a challenging environment, was highlighted by Frederic Kachar, CEO of Editora Globo and Sistema Globo de Rádio. He stressed how difficult it is for short- and medium-term interest rates to decline in real terms as long as public debt remains high. For Kachar, the lack of a substantive debate over fiscal adjustment in the presidential campaigns is a source of frustration. “This issue can no longer be postponed. Fiscal adjustment is necessary,” he said.
“In Brazil, we are facing institutional crises and challenges that need to be addressed urgently,” said Maria Fernanda Delmas, editorial director of Valor and Editora Globo’s business and economics brands, in opening the event.
“The work of the companies we are honoring today is an integral part of people’s lives and of building a country. We know this is an ongoing process, with successes and mistakes, and that it is subject to our critical coverage as a way of contributing to a better society. It can also inspire many other businesses and professionals to follow a better path,” she said. “We seek to look at companies’ financial health, but also at the broader responsibility of each corporation—its commitments to the communities where it operates, consumers, employees, public authorities, suppliers and other partners, the environment, and investors.”
Executives at the winning companies assess the current environment from this broader perspective.
“Social policy and fiscal policy have to go hand in hand. The more disciplined you are fiscally, the more you can control inflation and create room for social programs,” said Milton Maluhy Filho, CEO of Itaú Unibanco, the 2026 Company of the Year and winner in the financial sector.
The executive said public finances should be at the top of every presidential candidate’s priorities. “Whoever wins the election needs to urgently propose a budget reform, make the budget more flexible, eliminate a large portion of fixed spending, and tackle this problem. We need to create room to cut spending and better prioritize investment,” he said. “This will require action by the executive and legislative branches and by society as a whole. That would create room for private credit, both domestic and foreign, so that we can start talking about productivity.”
The trajectory of public debt is a concern for industrial executives. Gustavo Werneck, CEO of Gerdau—the winner in the steel and metals sector in the Valor 1000 ranking—issued a strong warning. “The lack of fiscal adjustment puts pressure on interest rates and inflation. We are approaching a point of no return. Government officials and those seeking office can no longer simply talk about it. We cannot enter 2027 without a commitment to fiscal adjustment focused on reducing public spending,” he said. “Without adjustment, there is no public investment. Without economic growth, companies won’t invest. It is a fundamental issue for Gerdau’s investment decisions.”
Alberto Kuba, CEO of WEG, the top-ranked company in the machinery sector, shares that view. He noted that the company works with long-term plans but expressed concern about the current environment. “Without fiscal adjustment, perceptions of [high] country risk will persist.”
For Henrique Fernandez, CEO of Intelbras, the winner in the electronics sector, putting public finances on a sounder footing is imperative. “Without it, interest rates will remain high for longer, making credit more expensive, curbing consumption and delaying investment decisions,” he said. “High interest rates that persist for a long time mean more selective demand and longer decision-making cycles among customers,” the executive said.
Valter Pitol, managing director of Cooperativa Agroindustrial Consolata (Copacol), the top-ranked company in agribusiness, sees a challenging outlook despite the company’s strong results. “For 2027, we see a lot of fiscal uncertainty, a higher cost of capital, and a weaker real,” he said. According to Pitol, a deterioration in the fiscal outlook could lead Copacol to postpone planned investments.
The concern cuts across industries. Diogo Corona, CEO of Smart Fit—the winner in specialized services—said fiscal policy affects the entire economic backdrop, including interest rates, inflation, the exchange rate, and overall confidence. “A more predictable environment helps support investment and consumption decisions,” he said.
“We need interest rates to be less restrictive,” said Leonardo Mesquita, co-CEO of Cury Construtora, the winner in real estate development. “Once interest rates return to more normal levels, we will be able to make investments with a longer-term view.”
Executives say greater predictability would be especially welcome at a time when companies are undergoing significant adjustments because of the ongoing tax overhaul.
The introduction of the Contribution over Goods and Services (CBS) will require changes to billing, accounting, and procurement processes at Sabesp, the winner in the water, sanitation, and environmental services sector. “The main challenge will be managing the transition safely while maintaining operational continuity and the quality of tax information,” said CEO Carlos Piani.
Éder Odvar Lopes, CEO of Inpasa, the top-ranked company in bioenergy, sees the tax overhaul as a historic transition. He said the biggest hurdle could be the regulation of special regimes, including regional tax incentives. “For a company operating in several states and with extensive supplier networks, the main task is adapting systems, tax processes, contracts, and financial flows to the new model,” he said.
Marcelo Oberg, CEO of Sotreq, the top-ranked company in wholesale and foreign trade, said the biggest test is not adapting to new tax rates and levies but preserving working capital. “It is essential to have mechanisms ensuring that the stock of tax credits from the previous system, particularly ICMS [state value-added tax], can be recovered so companies can maintain healthy cash flow,” he said.
At RD Saúde, which owns the Droga Raia and Drogasil pharmacy chains and won in retail, the preferential tax treatment provided for certain medicines is viewed as a step forward. “The measure could help expand access to and adherence to treatment, particularly among patients with chronic conditions,” said CEO Renato Raduan. “We are well advanced on this agenda, with our systems and processes being prepared to ensure a safe and proper transition to the new model,” he said, describing the reform as structurally positive.
André De Angelo, CEO of Acciona Brasil, the leader in construction and engineering, highlighted the impact of the tax overhaul on long-term concession contracts. “These contracts will span different tax regimes over their terms,” he said. “That affects financial models and requires mechanisms to restore the economic and financial balance of contracts with the granting authorities.”
According to Carlo Bergamaschi, executive director of Valgroup, the winner in plastics and rubber, the transition is highly demanding, particularly for a company operating in several states with a complex value chain. Changes to the rules and implementation timelines for different stages of the overhaul add to the complexity. Even so, he is optimistic. He believes the new system could bring significant improvements, such as reducing tax evasion and informality—“which means a fairer competitive environment,” he said.
The 2026 edition of the ranking assessed 1,034 companies based on financial performance. In a second stage, the highest-ranked companies were evaluated using ESG criteria—environmental, social, and governance practices—to determine the leaders in 28 sectors of the economy.
In a year marked by numerous challenges—from high interest rates and rising debt at home to wars that have severely disrupted global supply chains and heightened geopolitical tensions—these companies managed to grow both revenue and profit.
The Valor 1000 awards are organized by Valor Econômico and Época Negócios, with gold sponsorship from Alelo, Caixa Seguridade, Huawei, and Deloitte; silver sponsorship from FGV Educação Executiva, Vibra, MBRF, Febraban, and XP; and bronze sponsorship from Intelbras, CNI Sistema Indústria, Sicredi, and Mineração Taboca. Azul is the event’s official airline, and GAC is its official vehicle partner, with support from FIESP and Eletromidia and partnerships with Serasa Experian and FGVcef/FGV-SP.
Source: Valor International
https://valorinternational.globo.com/
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09/16/2026
BIOMETHANE OFFERS OPPORTUNITY FOR EMERGING ECONOMIES
Study says agribusiness could supply the industry with ample feedstock
Biomethane production remains concentrated in developed countries. Emerging economies, however, also have opportunities because of their available feedstock, particularly agricultural and livestock waste, according to a study by Brazilian researchers supported by the Low Carbon Mobility Institute (MBCBrasil).
The study found that gas produced by biodigesting waste could provide emerging economies with a renewable transportation fuel that supports their climate goals, energy-diversification strategies, circular economies, and rural development.
The study, “From Waste to Wheels—Turning Organic Waste into Renewable Fuel for Transport,” was written by researchers Glaucia Mendes Souza of the University of São Paulo (USP), Clayton Barcelos Zabeu of the Mauá Institute of Technology (IMT), Heitor Cantarella of the Campinas Agronomic Institute, and Luiz A. Horta Nogueira of the Federal University of Itajubá. They compiled research to highlight the potential for biomethane adoption worldwide.
According to the document, today’s most mature biomethane markets are all in developed economies, including Sweden, Germany, Italy, France, the Netherlands, Denmark, Finland, Switzerland, the United Kingdom, Norway, and California. Other markets are expanding, including Brazil, the United States, China, India, Spain, Ireland, Austria, and Belgium. Biomethane is produced in approximately 40 countries and used as a fuel in about 30 markets.
The researchers said data from the International Energy Agency (IEA) show that the largest untapped opportunities for biomethane production are precisely in regions with substantial agricultural production, livestock farming, and urban growth, including Latin America, Sub-Saharan Africa, and South and Southeast Asia. Global production potential for biogas and biomethane is 1 trillion cubic meters a year, equivalent to about one-quarter of worldwide gas demand.
The availability of feedstock for biomethane production “is linked to economic development and population growth. As emerging economies expand their agricultural production and urban populations, the volume of organic waste they generate also increases,” the study said.
The researchers listed the main feedstock types and the countries with the greatest potential to use them. Animal manure is abundant in Brazil, India, China, and Argentina. Brazil, India, Thailand, and Indonesia have large volumes of agricultural residues. In contrast, Latin America and Southeast Asia have abundant agro-industrial waste.
Among nonagricultural sources, China, India, and Indonesia have the potential to use municipal organic waste, while landfill gas and wastewater sludge offer significant potential in large urban centers in emerging economies.
The researchers emphasized that countries such as Brazil, India, and China “already have experience adapting biomethane technologies to conditions in developing countries and can provide valuable lessons for other emerging markets.”
To encourage the biomethane market, the study cited countries that have adopted individual policies or combinations of measures, including fuel-blending mandates, sector-specific renewable-energy targets, physical infrastructure development, and financial or tax incentives.
The researchers also cited a study by the IEA, the Food and Agriculture Organization of the United Nations (FAO), the Global Bioenergy Partnership (GBEP), and the European Biogas Association. It found that many biomethane projects succeed by making their other products—such as biofertilizers—and environmental services—such as carbon credits—economically viable. Additional revenue streams for a biomethane project may include waste-management services, biofertilizer, renewable carbon dioxide, carbon credits, and guarantees-of-origin certificates. According to the study, these additional sources can account for between 20% and 60% of a biomethane project’s total revenue.
Source: Valor International
https://valorinternational.globo.com/
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09/22/2026
FOREIGN RETAILERS OUTPERFORM BRAZILIAN PEERS AS CONSUMER MARKET SLOWS
International retail groups gain market share as Brazilian chains face weaker sales, higher debt, court-supervised restructurings.
Large international retail groups are weathering the current retail slowdown better than their Brazilian counterparts, while domestic chains are growing more slowly and increasingly turning to court-supervised restructurings. This is likely to further widen the gap in market share, strengthening the position of foreign operators in the revenue generated by Brazil’s retail sector.
The conclusion is part of a Valor analysis comparing the performance of Brazilian and foreign companies operating in the same segments based on their results so far this year. The differences are emerging at a time when Brazil has increased protection for sales of low-value imported goods.
President Luiz Inácio Lula da Silva signed into law on September 10 a measure that eliminates import duties on international purchases of up to $50, a tax that became known in Brazil as the “blusinha tax.” The measure is expected to reduce federal tax revenue by R$5 billion to R$6 billion in 2026, according to the Independent Fiscal Institution (IFI), a Senate-affiliated fiscal policy watchdog. Given that the previous tax rate was 20%, Valor estimates that at least R$25 billion worth of foreign goods priced at up to $50 will enter Brazil this year. That is equivalent to twice Renner’s net apparel revenue in 2025, making it the country’s largest fashion retailer.
Congressional approval of the measure was one of Lula’s priorities ahead of the October elections, and industry associations at the time described it as an electoral move.
An analysis of the major groups whose revenues can be compared shows that macroeconomic conditions and company-specific management decisions have hurt Brazilian retailers’ sales in recent years. These factors have weighed more heavily on their results than any significant positive factors benefiting foreign retail chains, widening the gap between the two groups.
Adding to the pressure, some Brazilian chains are heavily dependent on sales in the North and Northeast, regions hit harder by the broader slowdown in retail activity. Even after the federal government’s decision to increase cash-transfer program Bolsa Família payments by 15%, providing an additional boost to consumer spending in those regions, bank analysts on Friday (18) questioned whether the extra income would initially go toward reducing household debt and delinquencies.
The Monthly Survey of Trade, released by Brazil’s statistics agency IBGE on Tuesday (15), showed that retail sales increased 1.8% in volume from January through July. Consumer spending is slowing, however, as growth had reached 2.4% through March.
At the same time, the data show that foreign groups are also feeling the effects of weaker household consumption as household debt rises. So far, however, they appear to have withstood the pressure better.
According to the analysis, France’s Carrefour has been outperforming Grupo Mateus, a Maranhão-based retailer with a strong presence in the North and Northeast and a similarly diversified store portfolio, in same-store sales. Both companies operate in cash-and-carry and food retail.
Same-store sales are used as a gauge of underlying performance because they strip out the effect of new store openings, which typically boost revenue.
From January through June, Carrefour’s sales in Brazil were virtually flat in local-currency terms, declining 0.1% from a year earlier, while Mateus’ sales fell 7.7%. A year earlier, the Brazilian chain had posted 5.7% growth.
Carrefour’s operating profit in Brazil rose 0.9% from January through June, while Mateus’s fell 22.3% to R$888.5 million. “In Brazil, still a complex market, our adaptation plans and cost-reduction initiatives allowed us to further improve profitability and resume sales growth in the second quarter,” Carrefour CEO Alexandre Bompard wrote in his message accompanying the earnings report.
Likewise, Chile-based food retailer Cencosud, despite difficulties stabilizing some of its regional chains, posted results that were less pressured than Mateus’s. The Brazilian company has deliberately prioritized profitability over market share, abandoning an aggressive commercial strategy adopted in recent years.
Cencosud, which owns chains including Giga Atacado, Prezunic, and Perini, has seen sales affected by store remodeling and closures. Even so, its same-store sales decline was smaller than Mateus’s.
From January through March, the foreign group’s sales fell 1.4%, and the decline widened to 8% in the second quarter. Those figures were still less severe than Mateus’s, whose sales fell 7.3% and 8%, respectively. Bank analysts had projected a smaller decline of 5% to 7% for Mateus from April through June.
Ana Paula Tozzi, CEO of AGR Consultores, says large international groups give their Brazilian operations access to data, systems and management expertise, as well as funding from abroad—advantages that can make a difference in more challenging periods. “These businesses are operating in a perfect environment, but they operate with a long-term plan and a culture focused on the long term, and that is essential in more turbulent times,” she said. “It’s reassuring to know there is somewhere to turn—the parent company—when things get difficult,” she said.
While Carrefour delisted its Brazilian subsidiary in 2025 and Cencosud has no shares publicly traded in Brazil, Mateus went public on B3, Brazil’s stock exchange, in 2020.
The Brazilian group said its sales have reflected “a consumer environment that remains under pressure, marked by high household debt and changes in the composition of consumers’ shopping baskets,” according to its earnings report for April through June.
The company also said it has remained focused on profitability and that the strategy has delivered results. Gross margin was 23.2% from January through June, up 0.1 percentage point.
For João Soares, a Citi analyst, Mateus has been hurt by its heavy exposure to the North and Northeast, where it is a leading food retailer and consumer spending has weakened more sharply than in other parts of Brazil. The chain has also continued to prioritize profitability over sales, a strategy that has weighed on revenue. One-third of the nine states where the company operates are growing below the national retail average, according to IBGE data through June: Piauí, Alagoas, and Pará.
The chain has also been affected by its decision to reduce sales over the counter at its cash-and-carry stores. Mateus discontinued that activity this year for strategic reasons, affecting comparisons with the same period a year earlier.
“Management believes most of this adjustment [prioritizing profitability over sales] has been completed,” Soares said in an August report. “But management’s comments reinforced the cautious view on same-store sales in the short term,” he wrote. Grupo Mateus did not comment beyond its statements in the earnings report.
In the comparison between the companies, Cencosud’s sales across all stores fell 18% in the first half. Mateus, however, posted 12.5% growth, mainly due to the consolidation of a new business acquired in 2025—Novo Atacarejo—, the opening of 25 stores over the past 12 months, and higher sales at its wholesale and electronics businesses.
In convenience-store retail, another segment of the food market, Oxxo is growing faster than direct competitor GPA. Oxxo is owned by Mexico’s Femsa, which took full ownership of its Brazilian operations this year after previously holding a 50% stake. GPA, meanwhile, is undergoing an out-of-court restructuring and owns the Mini Extra and Minuto Pão de Açúcar chains.
In February, Brazilian company Raízen, part of Cosan Group, exited the business amid rising leverage by selling its stake in Grupo Nós, the joint venture that operated Oxxo stores in Brazil. The business has continued to post above-market growth.
In the first quarter after the partnership was dissolved, Oxxo Brazil grew 6.9%, followed by 11.6% growth in the second quarter. GPA’s convenience business grew 0.3% from January through March and fell 2.3% from April through June.
With R$4.5 billion in debt, the retail group that owns Pão de Açúcar filed for an out-of-court restructuring in March, and the plan has yet to receive court approval.
In its second-quarter earnings report, GPA said the decline in sales reflected the effects of the out-of-court restructuring, which caused supply problems at stores and ultimately affected revenue. “This effect peaked in May and has since begun to improve gradually. Sales returned to growth in June, in line with the gradual recovery in inventory availability and the normalization of operations,” the company said in its report.
The chain also cited the execution of a “strategy to prioritize more profitable channels,” which led to the end in 2026 of the “Aliados” project, aimed at transforming neighborhood stores under the CompreBem banner. It also cited moderate demand and a consumer environment under pressure. Oxxo and GPA did not comment.
In practice, weaker consumer spending affects all retailers exposed to the broader economic environment, including foreign groups. But some chains may also be more vulnerable because management decisions have failed to deliver the expected results.
“Changing management and strategy every three to four years sends a bad signal to the team and the market. GPA has frequently changed its leadership recently. Meanwhile, some chains grew too fast and opened too many stores in a short period, as was the case with Mateus, so eventually you have to pay the price,” Tozzi said.
Analysts say foreign groups still have the option of raising financing through their parent companies abroad, where interest rates are lower. Carrefour, for example, operates through a local bank that turns to its headquarters for capital.
In the home-improvement retail market, the outlook points to a challenging environment for both Brazilian and foreign chains.
“Several local chains have closed stores recently across all three states where we operate [Rio Grande do Sul, Santa Catarina and Paraná]. We often joke that the business that has grown the most in the region is real estate for rent,” said Peter Furukawa, CEO of Rio Grande do Sul-based Quero-Quero, which has about 580 stores nationwide.
Furukawa said the closures have created opportunities for the retailer to expand in some cities. At the same time, the chain has taken steps to respond to the slowdown in demand.
Among those measures, the company expanded this year its offering of cash purchases and products aimed at higher-income consumers, seeking to offset the decline in credit available to lower-income customers. The chain operates its own financial-services arm, Verdecard.
“We made a slight move toward more sophisticated assortments. The measures we have been taking in this tougher environment began in the middle of last year, when we realized that the deterioration in the economic backdrop was not going to change, and we are starting to see the results,” the CEO said. Quero-Quero’s same-store sales fell 2.5% from January through March and rose 6.7% from April through June.
French retailer Leroy Merlin reported flat same-store sales in Brazil in the first half of this year compared with 2025, according to management, putting it ahead of the market average. The sector declined 0.8% through June, according to IBGE.
Ricardo Dinelli, CEO of Leroy Merlin Brazil, said the company had to make choices and scale back some investments in a tougher market environment, selecting which projects to move forward with and being more transparent with employees about the approach. The retailer is Brazil’s largest home-improvement chain, with annual sales estimated by the market at R$9 billion to R$10 billion.
“We have had to make some course corrections recently and look inward to see whether what we were offering was really enough,” he said. “For example, we had projects involving made-to-measure products, such as curtains, that we started in some stores, but we decided not to expand them to more stores because it wasn’t the right time and we have other priorities,” he said. “We are putting more emphasis on our services offering. We have more than 160 types of services, and that business is not flat—it is growing faster [than the chain as a whole],” he said.
According to Dinelli, 2025 was also a difficult year, with sales stable compared with 2024, but he expects demand to increase as El Niño arrives and temperatures rise in the coming months. “Hot weather has a positive impact on our sales,” he said. The chain has not opened any stores this year; its latest opening was in Bauru, São Paulo state, in 2025. It has 53 stores nationwide.
Source: Valor International
https://valorinternational.globo.com/
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09/22/2026
REAL STANDS OUT AS BRAZIL’S ELECTION RACE STAYS TIGHT
Prospect of change in government fuels demand for Brazilian stocks and currency, while strategists warn fiscal risks remain under either candidate
Renewed expectations of a change in government after Brazil’s October presidential election boosted risk appetite in local markets, helping some assets outperform emerging-market peers. The real was among the five strongest currencies tracked by Valor on Monday (21).
In fixed income, expectations of an opposition victory also drove a decline in risk premiums across most of the interest-rate curve, with the exception of the very short end. The local risk-on mood received further support from global markets, as oil prices fell for a fourth straight session and government bond yields declined broadly across developed economies.
The stronger appetite for risk also lifted the benchmark Ibovespa stock index back above 186,000 points. Gains were held back by declines in mining company Vale and oil giant Petrobras shares.
The move came alongside a surge in major U.S. stock indexes, led by the Nasdaq, which closed at a record 27,122.094 points, surpassing its previous closing high of 27,093.901 reached in June.
Fiscal caution
Although the latest polls continue to show President Luiz Inácio Lula da Silva of the Workers’ Party (PT) and Senator Flávio Bolsonaro of the Liberal Party (PL) statistically tied in a potential runoff, Deutsche Bank’s Latin America economics and strategy team sees reason for caution.
The bank’s analysts said either candidate would face difficulty delivering substantial fiscal adjustment early in the next administration because of a “highly fragmented political landscape.”
In a report, the team said only a “modest” political and fiscal risk premium is currently priced into fixed income.
“We see lower rates under most fiscal regimes, but remain cautious given a tight election and fiscal uncertainty.”
The strategists are therefore maintaining only a curve-steepening position, designed to benefit from a wider gap between January 2029 and January 2031 DI (Interbank Deposit) futures rates.
On Monday, the January 2029 rate fell to 13.71% from 13.83%, while the January 2031 rate dropped sharply to 13.91% from 14.03%.
Equity gains
The decline in futures rates helped bolster the Ibovespa, which closed 0.74% higher at 186,596 points. Gains were limited by a 1.12% drop in Vale and a 1.03% decline in Petrobras preferred shares.
Beyond supporting the broader market, expectations of a possible change in government have recently increased demand for somewhat riskier stocks, Bank of America said.
BofA analysts said in a report that local investors have become more constructive on Brazilian equities, while foreign investors remain reluctant to increase risk exposure.
Defensive positioning remains concentrated in names such as electrical equipment maker WEG and infrastructure operator Motiva, while a higher-beta basket led by car rental company Localiza, toll-road operator EcoRodovias and truck and machinery rental company Vamos has attracted more interest, mainly as a tactical adjustment to the macroeconomic outlook.
Real outlook
Some foreign banks are also taking a more cautious view of the real. Deutsche Bank has reduced its position in the currency and now holds a neutral view, warning that “risks remain two-sided and positioning looks stretched” ahead of the election.
“Near-term risks are rising as fiscal and political concerns related to the elections intensify and seasonality turns less favorable in the second half. All of this is happening against an external backdrop that is less supportive for emerging-market currencies,” economists and strategists Francisco Campos, Beatriz Nunes, Christian Rojas and Carlos Muñoz-Carcamo said in a report.
The Deutsche Bank team nevertheless said Brazil’s favorable external accounts and high carry continue to support the real.
The exchange rate per U.S. dollar closed 0.7% lower at R$5.10 in the local market on Monday.
Hawkish comments from Federal Reserve officials during the day may have supported the U.S. currency, even as Treasury yields fell at the intermediate and long end of the curve. Short-term yields edged higher.
Late in the session, the two-year Treasury yield was at 4.75%, up from 4.75% in the previous session, while the 10-year yield fell to 4.97% from 4.99%.
Source: Valor International
https://valorinternational.globo.com/
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09/23/2026
U.S. DIESEL EXPORT BAN COULD HIT BRAZIL HARD, EXPERTS WARN
U.S. supplied about 80% of Brazil’s diesel imports in September as disruptions in Russia and Middle East tighten global market
Brazil could face a sharp impact if the United States restricts diesel exports, energy-market experts say, as President Donald Trump weighs a measure to contain record domestic fuel prices ahead of the Nov. 3 midterm elections.
Brazil relies on imports for roughly 30% of its diesel market, making it particularly exposed to any U.S. restrictions. About 80% of the diesel Brazil imported in September came from the United States, according to a source familiar with the fuel market. India is also an important supplier, though its share is smaller.
Bloomberg reports that U.S. agricultural state lawmakers are urging the White House to halt diesel exports amid the harvest season, driven by increased demand from diesel trucks. Additionally, states like Alaska have requested restrictions as winter nears, when heating fuel consumption rises.
The oil industry, however, could be hurt by restrictions on overseas sales.
“It is as if the two biggest forces within the Republican Party were in conflict. Agriculture and the oil industry are pulling in opposite directions,” said a source familiar with the discussions.
“If exports are banned and refineries have to sell at domestic prices, we need to see who would absorb the difference compared with what they could earn by selling overseas,” the source said.
It remains unclear whether any restriction, if adopted, would be temporary or whether the U.S. government could instead limit overseas sales through export quotas.
Global supplies already under strain
After Russia’s invasion of Ukraine and the ensuing sanctions, discounted Russian diesel became a major source of Brazilian imports, competing with U.S. supplies for the top spot.
However, increased Ukrainian strikes on Russian refineries led Moscow to halt diesel exports in July, exacerbating an already tight market due to supply issues in the Middle East. Additionally, China has focused on its internal needs and limited exports since the U.S.-Iran conflict started on Feb. 28.
Felipe Perez, a director at S&P Global, said that even without an official decision, a potential U.S. export suspension would disrupt global diesel flows because the U.S. is such a major supplier.
“Diesel prices in the United States continue to rise and are beginning to affect American farmers,” Perez said. “If exports are indeed suspended, refineries could reduce production because the domestic market cannot absorb all the volume and storing it is less profitable. That reduction in refinery output could also affect U.S. gasoline production.”
Perez said buyers that currently rely on U.S. diesel would have difficulty finding the same volumes elsewhere. In that case, consumers worldwide would compete for scarcer, more expensive supplies at a time when diesel refining margins have hovered near record levels in recent months.
“Diesel consumers have very little flexibility,” he said. “They cannot simply switch to another fuel. They will have to pay more.”
Reuters reported Tuesday that Trump said he supported banning U.S. diesel exports.
“I’ve already said we shouldn’t export diesel. We produce a lot of diesel. I’ve advocated that. I’ve advocated it with my team,” Trump told reporters before a meeting with Ukrainian President Volodymyr Zelensky.
Treasury Secretary Scott Bessent said the administration is examining whether a ban would be feasible and whether a full or partial restriction could work, Reuters reported. Trump also said he discussed Ukrainian attacks on Russian refineries with Zelensky.
Source: Valor International
https://valorinternational.globo.com/
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09/29/2026
BRAZIL BETTING BAN TRIGGERS LEGAL BATTLE WITH INDUSTRY
Industry groups seek suspension of sweeping measure as government sues 17 operators for at least R$1 billion over alleged social and health costs
Brazil’s online betting industry and the federal government opened competing legal fronts Monday over President Lula’s sweeping ban on online gambling, as industry groups asked the Supreme Court to suspend the measure. In contrast, the government sued 17 operators for at least R$1 billion in collective damages.
They are the first legal actions on the issue since President Lula issued the executive order on Friday, another major policy move made days before the first round of the presidential election.
At the Supreme Court, the industry groups are seeking an injunction to suspend the measure until Congress either converts it into law or the court reviews it. No justice has been assigned yet, but the companies want the case assigned to Justice Luiz Fux, who is already handling other industry-related cases.
If the court rejects their main request, the betting companies are asking it to either exempt operators already authorized to do business in Brazil—currently, 85 companies operating 186 brands—or to delay enforcement of the ban for six months.
The National Association of Games and Lotteries, representing 32 authorized companies, filed the petition in cooperation with the Brazilian Institute for Responsible Gaming.
Among its arguments, the association says the executive order violates legal certainty, freedom of enterprise, the principle of proportionality, consumer protection, and Brazil’s federal system. It describes the measure’s timetable as “abusive.”
In a statement, the group argued that the government had overnight eliminated a market that had attracted investment, paid taxes and created jobs, while leaving millions of gamblers exposed to an illegal market with no protections.
The association also argues that no urgency justified the executive order; that such a measure cannot address criminal matters; that the government failed to estimate its budgetary or financial impact; and that it encroaches on the administrative powers of Brazil’s states.
The Attorney General’s Office acted preemptively, asking the judge handling the case to give the president’s office and the institution 72 hours to present their arguments before making a decision.
Government seeks compensation for health costs
On another front, the federal government filed a civil lawsuit in federal court in Pernambuco state because, according to the Attorney General’s Office, Brazil’s Northeast is among the regions most affected by problem and high-risk gambling because of its greater concentration of vulnerable groups.
According to the institution, the 17 companies named in the lawsuit account for about 80% of Brazil’s fixed-odds betting market.
The Attorney General’s Office also reports that 10.9 million of the 28 million Brazilians who currently gamble exhibit patterns of high-risk or problem gambling. According to the institution, between January 2018, when betting was legalized in Brazil, and December 2025, treatment for pathological and excessive gambling through Brazil’s public health system increased by 140%.
The government argues that the compensation betting companies must provide under current legislation does not cover the costs the public health system bears.
According to the Attorney General’s Office, the exact amount the companies would have to reimburse the public health system for material damages, should the government prevail, would be calculated at the end of the proceedings. The institution cites preliminary Health Ministry studies estimating losses of at least R$2.6 billion.
The government is also asking the court to order the companies to repay twice the amounts wagered by people diagnosed with gambling disorder.
Task force targets illegal platforms
Throughout the day, the government released details of actions taken by a task force created to cut off access to unauthorized platforms and prevent new online addresses from offering betting to Brazilians.
The task force identified 506 websites suspected of offering unauthorized betting and seven social media advertisements that began circulating on the day the measure was issued, despite the measure’s ban on new advertising.
The government said it would continue monitoring the platforms to ensure that advertisements are removed and proposed a technical meeting with representatives of major technology companies. A report prepared by the ministries involved recommends immediately removing advertisements first published after the provisional measure took effect.
The government also blocked messaging app channels that promoted online betting. Together, they had 212,000 members.
In an extraordinary edition of the official gazette, President Lula also issued a decree establishing a new interagency committee to police illegal fixed-odds betting and advertising.
The committee’s responsibilities include sharing information on individuals and companies involved in operating, offering, intermediating, or promoting fixed-odds betting; maintaining a unified database of internet domains, applications, and bank or payment accounts; and establishing joint protocols for blocking websites and apps.
The committee will also be able to propose standardized procedures for notifying platforms, service providers, and financial institutions, and for referring evidence of possible administrative, tax, or criminal violations to the appropriate authorities.
Source: Valor International
https://valorinternational.globo.com/
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09/30/2026
AIRLINES STEP UP PUSH TO MITIGATE BRAZIL TAX REFORM IMPACT
International aviation industry seeks changes to new tax rules, warning higher ticket prices could cut international passenger demand by 17.8%
The international aviation industry has stepped up efforts in recent months to find ways to mitigate the impact of Brazil’s tax reform. The effort has received support from the Ministry of Ports and Airports, which has submitted a draft proposal with recommendations to the Finance Ministry and the Management Committee of the Tax on Goods and Services (CGIBS).
International airfares, which are currently tax-exempt, will be subject to half the standard rate under the new system, estimated at 26%. On domestic flights, the current rate of around 9% will rise to the full rate. The industry has been seeking an alternative for some time, so far without success.
Behind the scenes, sources say there is an expectation that parts of the tax reform could be postponed until after the election. That is because several sectors are facing major disagreements over the new rules. Airlines, meanwhile, have already begun selling tickets for the first months of next year without knowing exactly what tax rate they will have to pay.
According to the International Air Transport Association (IATA), if the reform takes effect as currently drafted, it would increase international airfares by 13.3%. That could reduce demand by 17.8%, equivalent to 5 million fewer passengers a year.
The National Civil Aviation Secretariat (SAC), part of the Ministry of Ports and Airports, prepared the recommendations sent to the Finance Ministry in an effort to find an alternative approach.
One proposal calls for a zero tax rate, based on the principle of reciprocity between countries. “International air transportation is governed by international agreements. And the vast majority of those countries, with a few exceptions, do not impose any type of tax on international air transportation services,” said Daniel Longo, head of the SAC.
The ministry proposed a special tax regime to the Finance Ministry, a model supported by provisions in the supplementary laws governing the tax reform. The proposals were submitted in August, but there has been no response so far. The Ministry of Finance did not respond to a request for comment.
Longo said the prospect of imposing a tax on international aviation is a concern for the ministry, particularly as tourism continues to grow. “Last year, we set a record for the number of tourists visiting Brazil. If we start adding costs, we could be reducing demand,” he said.
Another recommendation to the Finance Ministry, Longo said, involves regulations that would prioritize air operations with little or no environmental impact. Such operations would be exempt from the excise, known as the “sin tax,” which was created to impose higher taxes on activities that have negative effects on society or the environment. The tax also applies to aircraft and vessels, as well as products such as alcoholic and sugary drinks.
Chris Sununu, chairman and CEO of Airlines for America (A4A), expressed support for the SAC’s proposal for a zero VAT rate. “A lower tax burden and greater legal certainty show that Brazil is ready for further growth,” he said in a statement to Valor.
Another issue on the industry’s radar is a change to Brazil’s Electronic Air Transportation Ticket system (BP-eTA), which will begin requiring around 200 fields of passenger information. Today, the system collects only basic information, such as the passenger’s name and identification number.
Peter Cerdá, IATA’s regional vice president for the Americas, said the industry has submitted to the government a list of 15 to 25 fields that could be provided while complying with personal-data protection requirements under Brazil’s General Data Protection Law (LGPD) and international legislation.
According to IATA, the requirements currently proposed for BP-eTA would entail a level of detail significantly greater than that required in markets such as Colombia, Peru, Argentina, Spain, Portugal, and France.
“The impact is significant, both operationally and in terms of implementation,” said Cerdá, who is also president of the Latin American and Caribbean Air Transport Association (ALTA).
Cerdá said the association and executives from global airlines met with government representatives in Brasília in August. “The only people we weren’t able to speak with were officials at the Finance Ministry,” he said.
Cerdá also said the industry has asked for the new ticketing requirements to be postponed. The rules were originally scheduled to take effect in August but were pushed back to December 1. “We have 46 airlines operating in Brazil. What they [the government] are asking for is a solution that simply cannot be delivered,” he said.
Juliano Noman, president of ABEAR, said the industry views higher taxes on international airfares as a move that would hurt tourism. Just look at places like Bonito [in Mato Grosso do Sul state] and Jericoacoara [in Ceará],” he said.
One airline closely watching the changes is Portugal’s TAP, the international carrier serving the largest number of destinations in Brazil. Carlos Antunes, the airline’s head of the Americas, said TAP has put its Brazilian expansion plans on hold. “This change will mean many hundreds of thousands of euros in additional costs,” he said.
The group has no plans to launch new routes in 2027. This year, it added two routes from Curitiba and São Luís to Lisbon. TAP currently serves 15 cities in Brazil. The airline carried 2.2 million passengers in Brazil last year and aims to increase that figure by 5% this year.
CGIBS said it is reviewing thousands of contributions submitted by different sectors of the economy regarding the regulations for the IBS and that its representatives have met with SAC to discuss the aviation industry. “The committee has not yet taken a position on the proposals submitted, which are still undergoing technical review,” it said.
“Regardless of the merits of the proposals received, it is noteworthy that the committee has regulatory authority only over the IBS and cannot introduce new rules or go beyond what has been established in legislation approved by Congress,” the committee said, adding that expanding special tax regimes for certain sectors would tend to increase the burden borne by other parts of the economy.
Source: Valor International
https://valorinternational.globo.com/
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09/30/2026
PIX TRANSACTIONS FALL 10% AFTER BAN ON BETTING SITES
Part of financial sector applauds measure against online gambling amid concerns over legal uncertainty
The number of Pix transactions fell about 10% over the past three days, after the government published a presidential decree (MP) late Friday afternoon (25) banning online sports betting (known in Brazil as “bets”). For part of the banking industry, the ban is viewed favorably, since there are in fact many indicators that betting sites were eroding household budgets, especially those of low-income families, and thus affecting delinquency. Still, there is criticism over the legal uncertainty generated by the measure.
On Saturday (26), the number of Pix transactions (not the financial volume) was 229,600, down 11% from the average of the previous four Saturdays, according to Central Bank data. On Sunday, transactions totaled 165,900, down 12.0% on the same basis of comparison. And on Monday (28), they reached 213,000, a decline of 7.4%. Over the three days combined, the drop is 10.0%, also compared with the average for the same period in the previous four weeks.
“Obviously it’s not possible to attribute this drop in Pix only to the ban on bets, but it gives a sense of the size of the problem. It has become a public health issue,” says an industry leader. “I think it was the right decision by the government. I don’t like betting sites in any sense,” adds a banker at a midsize institution.
As Valor reported Tuesday (29), analysts also assess that the ban on bets could be positive for banks. Citi notes that more than 40 million Brazilians have already put money into these bets, representing about R$20 billion in gross revenue in the first half of this year. “The measure could leave higher disposable income for households, which would translate into better asset quality for banks, especially in the low-income segment,” says a banking source.
Another source in the sector also acknowledges that the measure could have a slightly positive effect for banks by helping ease households’ disposable income. Still, the source criticizes how the government made the decision, creating legal uncertainty and also affecting the fiscal situation.
“I think betting sites do a lot of harm to the local economy and to commerce, and they shouldn’t have been regulated the way they were, but overturning by MP a law and legal structure that was debated for months in Congress is complicated.”
A source in the fintech segment, meanwhile, says that to a certain extent the ban was already expected. “The negative externalities far outweigh the positive ones,” he says, speaking about the effects on society at large. In any case, he notes that some fintechs operate exclusively in this sector and others, though not exclusive, have significant revenue from bets, whether in handling betting flows or in international remittances. “Therefore, an abrupt change will have economic impacts on this subsegment.”
Source: Valor International
https://valorinternational.globo.com/
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