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Category: Paywall
Posted inDaily Brief
Brazil Railroad Closes
The government finally shut down its defunct RFFSA rail network after five years’ effort, opening the way for privatized operators to increase investments to eliminate critical transportation bottlenecks. The government began privatizing RFFSA piecemeal in 1996, but failed to insulate private operators from $1.1 billion in contingent legal liabilities. The government has now transferred the agency’s liabilities to a federal fund, removing further legal risk. Operators invested $700 million last year, despite these uncertainties.
Posted inDaily Brief
Meirelles Faces Charges
Brazil’s prosecutor-general asked the Supreme Court to investigate allegations that central bank president Henrique Meirelles has evaded taxes and performed illegal international money transfers. In August, President Lula da Silva issued a decree granting central bank presidents the status of cabinet minister, which means they may be tried only by the Supreme Court.
Posted inDaily Brief
Brazil: Industrial Output Growth Slows
Brazil’s industrial production expanded at the slowest pace in five months in February as rising interest rates curbed demand. Industrial output rose 4.4 percent from the year-earlier period after increasing 6 percent in January. The slowdown indicates the pace of economic growth is easing, which may take pressure off the central bank to keep boosting the benchmark lending rate. Central bankers have raised the benchmark overnight rate seven times since September, leaving it at a 17-month high of 19.25 percent.
Posted inDaily Brief
Mexican Inflation Accelerates
Mexican consumer prices rose 0.45% in March as higher international oil prices pushed up prices for gasoline, natural gas and jet fuel. The Central Bank also said prices for agricultural goods are rising. However, the core inflation rate, which excludes volatile energy and food prices, fell to 0.31% last month from 0.42% in February.
Posted inDaily Brief
Brazil: Power Rates to Increase
Brazil’s electricity regulator granted utilities bigger rate increases than analysts had forecast, raising concern that inflation may accelerate. Companhia Energética de Minas Gerais, the country’s largest combined power generator and distributor, can raise prices 21% while Companhia Paulista de Força e Luz, which serves São Paulo state, can boost rates 9%. The Central Bank is trying to lower inflation, which hit 7.4% in the 12 months through February.
Posted inDaily Brief
Mexico’s Backward Politics
There are many reasons to dislike Mexico City’s mayor Andrés López Obrador. He is a populist and a nationalist with retrograde ideas on economic policy. Amlo, as the mayor is known, believes in democracy but centralizes power in his own hands. He is personally honest, but surrounded himself with crooks. Yet to even consider barring the country’s most popular politician from running in next year’s presidential election shows how insecure Mexico’s ruling elite has become. His impeachment will begin Thursday on charges that he ignored a court order stopping the city from building a hospital access road on private land.
Mexico is Latin America’s biggest economy and one of just three in the region with an investment grade rating. But its political sophistication lags far behind Brazil, Colombia or Chile. The Revolutionary Institutional Party ruled Mexico for 71 years until the current conservative government of President Vicente Fox took office in 2000. Removing Amlo from the race would ensure the PRI’s return to power.
He has promised a campaign of civil disobedience if he is removed from office and prevented from running for president. Markets are in turmoil as well they might. Economic upheaval often coincides with government changes. The next government’s legitimacy would suffer if Amlo is barred from the election. Mexico is no banana republic, so it should stop behaving like one. It cannot hope to evolve into a modern and sophisticated state until its politicians grow up.
Posted inDaily Brief
Brazilian Bonds Rise
Brazilian bonds rose Tuesday on expectations that declining US bond yields will prompt investors to seek higher returns on riskier emerging-market debt. Brazil’s benchmark bond due in 2040 gained 55 cents to $111.25 as the yield on the benchmark 10-year US Treasury note held near a four-week low, making emerging market bonds more attractive. Brazil’s government owes creditors about $450 billion, making it the largest debtor in the developing world.
Posted inDaily Brief
Movistar Plans Investments
Spanish mobile telecom Movistar, a unit of Spanish wireless telecom Telefonica Moviles, plans to invest $155 million in Argentina this year. The number of the mobile telephone calls in Argentina increased 78 percent in 2004, while the number of active handsets increased 46 percent. Movistar has a 43 percent market share in the country.
Posted inDaily Brief
Brazil’s Real Strengthens
The Brazilian real rose to a five-week high Wednesday on expectations that record exports will sustain the fastest economic expansion in a decade and boost demand for the local currency. The real ended the day at 2.60 to the dollar. The currency has gained 4.7 percent since Finance Minister Antonio Palocci on March 28 raised his 2005 export forecast to $112 billion, 17 percent above last year’s record.