Financial market shows positive reaction to economic reforms in Brazil

The Brazilian financial market reacted very optimistically to the new government announcements of privatization and to a proposal for new interest rates for BNDES (National Development Bank). The currency value is on the rise and so is IBOVESPA, showing great recovery rates since its last downturn earlier in June, after corruption accusations were released in in mid May, involving President Temer.

The positive reaction seems to be a reflection to the privatization package announced, but also for the fact that the measure improves the country’s governance at a micro level as well, having a good effect on overall enterprise management practices, improvement in the business environment and povides a promise of greater productivity as a result.

The forecast is for a wave of foreign capital income, though investors might want to wait at first, since currency exchange rates show a tendency for improvement as well. Share price increases were shown in the energy, mining and financial sectors.

(Revoked) Brazilian government removes legal protection on mineral reserve

As of August 30th, the decision was revoked by Federal Justice, in response to a popular iniciative, alleging that the authorization of mining practices in the Amazon must be made by passing a Law through the House of Representatives and not by a presidential decree.

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The Brazilian government extinguished the legal reserve protection for Renca, the National Reserve for Copper and Associates, located on the border of the states Pará and Amapá, originally created in 1984. Renca encompasses a total of 4,6 mi hectares, a territory composed by 9 distinctive protected areas.

The region is of great interest to the mining industry because of its potential for the extraction of gold and other minerals such as iron, manganese and tantalum. Without the legal protection, the área may now be subject to exploitation.

The measure was made oficial by decree 9.142/17 on August 23rd 2017, and has already caused some backlash commotion by activists, though it does not affect existing legislation for native forests, conservation areas and indigenous land protection. The Brazilian government expects investment attraction and increase in the country’s mining production.

Brazilian government announces new privatization plans

The Brazilian government has just announced the agenda for a series of new plans for auctioning public assets, aiming to raise government income in order to meet fiscal objectives.

This is the follow up stage of a series of privatizations and concessions announced in September 2016, which included in its first phase 34 projects. In this second phase they are releasing 57 new assets. The plan is parto f the Investment Partnership Program, which discusses concessions and privatizations.

Earlier this week the Ministry of Mines and Energy had already announced a proposal to the privatization of Eletrobras, through selling part of the shares owned by the Federal Government, though maintaining its veto power.

The government announced that wishes to auction part of its BR-364, a federal highway running from the state of Rondônia and Mato Grosso and rebid part of BR-153 between Goiás and Tocantins. BR-153 was auctioned back in 2014 during Roussef’s administration, but the concessionary Galvão did not meet the contracted investments and had its contract cancelled. These auctions are currently scheduled for the last quarter of 2018.

The Ministry of Transport is also proposing the concession of 15 port terminals, which are áreas dedicated to cargo handling in ports. They are located in Belém (LPG and liquid bulk cargo), Vila do Conde (liquid bulk cargo), Paranaguá (grains) and Vitória (liquid bulk cargo). The government also included the early extension of fertilizers terminal of Itaqui Port and the authorization for capacity increase in the Terminal Agrovia Nordeste, located at the Port of Suape. All biddings scheduled for 2018.

The Private Investment Partnership also foresee the concession of 12 airports, in two regional blocks: Nordeste (cities of Maceió, Aracaju, João Pessoa, Campina Grande, Juazeiro do Norte and Recife) and Midwest (cities of Cuiabá, Sinop, Alta Floresta, Barra do Garças and Rondópolis). The plan also confirms the intention of selling shares from Infraero at Guarulhos, Confins, Brasília and Galeão airports.

The Ministry of Defense also included the intention of a Public-Private Partnership in the modality of a 25-year administrative concession for the services of telecommunications signal transportation for the Department of Air Space Control (Decea) and military organizations in the country.

The Ministry of Mines and Energy will also propose 11 concession projects for the instalation of electric transmission (transmission lines and substations) located in the states of Bahia, Ceará, Pará, Paraná, Paraíba, Pernambuco, Piauí, Rio Grande do Norte, Minas Gerais e Tocantins.

Source: This article was originally posted on G1 News in the Portuguese language and translate by Juliana Michelon Alvarenga. BSc. International Relations, MBA Business Intelligence. []