Category: Brazil

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.

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.

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.

Senior officials at the Brazilian Finance Ministry and Central Bank have quit unexpectedly. Marcos Lisboa, undersecretary for economic policy at the Finance Ministry has left and will be replaced by Bernard Appy, a close aide of Finance Minister Antonio Palocci. At the Central Bank, Eduardo Loyo resigned from the Central Bank where he was director of special studies and a voting member of the monetary policy council, to join the International Monetary Fund as Brazil’s representative. Neither change is expected to have a significant impact on government or Central Bank policy.

Brazil’s low-cost carrier Gol and its shareholder AIG Capital Partners, have raised $204.7 million with the sale of new and existing shares in the airline. Gol and an affiliate of AIG Capital, sold 14.7 million non-voting preferred shares. Gol sold 5.5 million new shares and AIG’s affiliate BSSF sold 9.2 million shares it held in the carrier. Gol, now Brazil’s third airline, went public last year in a New York and São Paulo IPO.

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.

Banco Bradesco, Brazil’s biggest private sector bank, will sell $1.6 billion worth of 20-year bonds on the domestic market and scale back borrowing overseas. The bank will cut by more than half the $2 billion of bonds it planned to sell on international markets this year. Brazilian companies have boosted domestic bond sales as the fastest economic growth in a decade helps drive demand for local-currency debt. Bradesco’s leasing arm will issue the debt, and use the proceeds to meet increased demand for financing.

Brazil posted a March balance of payments surplus of $3.6 billion, even after making its first payment of the year to the IMF of $1.17 billion. The current account was $1.76 billion in surplus. The current account surplus hit a new record of $12.71 billion in the twelve months through March, equivalent to 2.05% of GDP. Profit and dividend remittances were $661 million, down from February’s $1.35 billion. The capital and financial accounts posted a $1.56 billion surplus. Total private sector debt amortizations were $800 million. FDI flows were $1.4 billion. Gross international reserves climbed to $61.96 billion, or about $38 billion in net terms.

Brazilian economists increased their 2005 inflation forecast for an eighth straight week on concern rising international oil prices will force the government to raise domestic fuel prices, a Central Bank survey showed. The median expected inflation rate rose to 6.15% from 6.1% a week earlier and from 5.68% at the end of February. The estimate is the highest since the Central Bank started polling the market’s inflation forecasts four years ago.

Brazil’s Embraer, the world’s fourth-biggest aircraft maker, won a $400 million order for 15 aircraft from Saudi Arabian Airlines, the first Middle-Eastern carrier to buy the company’s new, bigger jets. The state-run airline ordered 15 Embraer 170 aircraft with delivery due to begin in December. Embraer is trying to secure orders from Europe and other parts of the world to offset the growing risk that some of the company’s cash-strapped US customers may continue to cancel orders.