Category: Brazil

Two senior officials from Brazilian President Luiz Inacio Lula da Silva’s Workers’ Party stepped down in a bid to help the party restore its credibility, eroded by allegations of corruption. Workers’ Party Treasurer Delubio Soares took a leave of absence Tuesday, following a similar move Monday night by General Secretary Silvio Pereira. Jose Genoino, who helped form the Workers’ Party with Lula 25 years ago and now serves as its president, will remain in his post. Genoino denies claims the party paid bribes to lawmakers to win their support for legislation

Brazilian bank Banco Votorantim upped a Eurobond issue to $125 million from $100 million on strong investor demand. The three-year bonds were placed with a coupon 125 basis points above Libor. Banco Votorantim was Brazil’s ninth largest bank in terms of equity at the end of last year and is part of Votorantim Group, one of the biggest industrial conglomerates in Brazil.

Fifteen lawmakers from Brazilian President Luiz Inacio Lula da Silva’s Workers’ Party called on the party’s leadership, including party president Jose Genoino, general secretary Silvio Pereira and treasurer Delubio Soares, to step down to help restore confidence in the government amid mounting allegations of corruption. Former Lula ally Roberto Jefferson rocked the country last week with detailed accusations of government theft and vote-buying.

Brazil’s central bank cut its 2005 growth forecast to 3.4 percent, down from 4 percent, and said nine months of interest rate increases will help ease inflation next year to 3.7 percent, compared with a previous forecast of 3.8 percent. The bank increased its 2005 inflation forecast to 5.8 percent from 5.5 percent, citing short termfactors such as rising utility rates.

Brazil’s President Luiz Inacio Lula da Silva ordered an investigation into allegations of corruption at Furnas Centrais Eletricas, a unit of Eletrobras, the country’s biggest power generator. Roberto Jefferson, former Lula ally and federal deputy, says Lula’s Workers’ Party got money from Furnas to bribe legislators for support. The Workers’ Party denies the accusations.

More than 20,000 Brazilian farmers marched in the capital Brasilia, parking tractors outside the presidential palace as they seek government aid to cope with drought damage, mounting debt and declining incomes. Farm industry leaders and four governors, including Blairo Maggi, the governor of Mato Grosso state and the world’s biggest soy grower, are pushing for renegotiation of $7.2 billion in debt and increased spending on disease control. Farmers in Brazil, the world’s biggest sugar, coffee and orange juice producer and the second largest grower of soybeans, lost 13 percent of their expected crop in the first half of this year as a drought struck the country’s south.

Brazil’s currency rose to 2.36 reais per US dollar Wednesday as the highest domestic interest rates since 2003 attract increased investment in the country’s local debt markets. The real has gained 13 percent against the dollar this year. Investors are increasing their holdings of Brazilian sovereign bonds, which pay as much as 16 percentage points more than comparable US debt. The strengthened real, however, is crimping exports and slowing economic growth.

Brazil government labor inspectors have released more than 9,000 farm workers held against their will since 2003, according to the labor Ministry. Most of the workers were held as virtual slaves at farms in remote regions of the country. The government says over 15,000 farm workers have been released in the last ten years.

The Brazilian government says the public sector posted a R$6.31 billion ($2.58 billion) primary surplus in May, raising its January-May primary surplus to $19.53 billion. The primary surplus – before interest payments – in the first five months of the year was equivalent to 6.6% of GDP. The primary surplus was 5.02% of GDP in the twelve months to May. Brazil has committed to a primary surplus of 4.25% of GDP. Economists at UBS say the government usually builds up a cushion of savings at the beginning of the year, when public spending is seasonally lower.