Venezuela’s Central Bank has announced fixed maximum lending and minimum deposit rates for commercial banks, which will take effect May 1. Banks will have to cap lending rates at the equivalent of the Central Bank’s discount rate minus 50 basis points. With the discount rate at 28.5%, banks will have to limit the rates they charge to 28%. Banks will also have to pay a minimum of 6.5% on saving accounts and 10% on certificates of deposit of 28 days or more.
Category: Daily Brief
Posted inDaily Brief
Brazil Primary Surplus Hits Record
Brazil’s primary budget surplus, which excludes interest payments, rose to a record R$12.26 billion ($4.9 billion) in March on strong tax revenues and government controls on social security spending. The surplus was 19% up on the same period last year.
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Brazil Sees Higher Inflation
Brazil’s Central Bank said it’s ready to raise the benchmark lending rate for the ninth time since September because rising oil prices are fueling inflation. The bank’s monetary policy committee last week raised the benchmark rate to an 18-month high of 19.5%. According to minutes of the meeting a continued rise in oil prices will force the government to raise domestic fuel costs. Also, a drought in the south of the country may push food prices higher and utility rates may rise more than expected.
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Chávez Boosts Minimum Wage
Venezuelan President Hugo Chávez said he will raise the minimum monthly salary 26% to $189 per month after record oil prices boosted government revenue this year and last. A 61% surge in government spending helped fuel economic growth of 17% last year after contracting 7.7% in 2003 and 8.9% in 2002. The Central Bank is predicting 11% growth for the first quarter.
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Dantas Sells BT Stake
Telecom Italia, Italy’s largest telephone company, agreed to pay $528 million for a stake in Brasil Telecom, resolving a seven-year dispute with financier Daniel Dantas whose investment firm Opportunity controlled the carrier. Telecom Italia said it will buy shares in holding companies that control Brasil Telecom and are held by Opportunity.
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Femsa’s Profit Falls
Femsa, the world’s second-largest Coca-Cola bottler, said first-quarter net income fell 17% to $64 million as interest costs rose faster than sales at its soft drink, beer and Oxxo convenience-store units. Femsa’s interest charges were $90 million, a 29% increase from a year ago, after the company paid $1.25 billion in August for the 30% stake that InBev owned in Femsa’s beer unit. The company’s net debt rose 26% from a year earlier to $3.58 billion.
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Gol Sells Shares
Gol, Brazil’s third-largest airline, and AIG Capital raised $205 million in a sale of 14.7 million new and existing Gol shares. Gol is increasing its fleet to add new domestic and international routes. The carrier boosted its order with Boeing by four aircraft last month as economic growth in Brazil spurred demand for air travel and the airline took market share from competitors.
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Remizov Joins DrKW
German investment bank Dresdner Kleinwort Wasserstein has appointed Alexei Remizov, 36, as director responsible for Latin America Sovereign Origination, based in New York. Remizov moved over from JP Morgan where he headed the bank’s Global Country Risk Assessment and Sovereign Advisory Group. He also worked at Standard & Poor’s as associate director in the Latin America Sovereign Ratings Group and at the World Bank’s Latin American and Central & Eastern Europe country operations departments. Remizov reports to Enrique Bustamante, managing director and head of Corporate Finance & Origination, Latin America.
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América Móvil Ups Investments
Mexico’s biggest wireless company América Móvil will invest $200 million in Peru this year as part of the company’s expansion throughout South America. América Móvil also says it plans to buy Brazilian wireless telecommunications services provider Telemig Celular Participações. América Móvil is one of the two largest mobile phone operators in Latin America, and competes directly with Spanish wireless telecom provider Telefónica Móviles.
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Brazil: Lending Increases
Brazilian bank lending rose 1.6% in March, the fourteenth straight monthly increase, to $201 billion after rising 1.4% in both February and January. Lending has risen 30% since September 2003 when President Inácio Lula da Silva began a program of payroll loans to make borrowing more affordable by reducing the risk of defaults. The program allows workers to borrow at lower costs because repayments are deducted directly from their wages.