After public pressure government gives up to tax solar energy in Brazil

Aneel (National Electric Energy Agency), the body that regulates the electric power sector in Brazil, wanted to change the current rule, which allows solar energy produced by those who have solar panels at home or in the company to be returned to the grid. Those who do this get discounts on their electric bills.

Therefore, according to the current rules for solar energy generation for own consumption in Brazil, the operation is simple: who produces more energy than it spends throws this surplus in the distribution network and gets the credits. Those who produce less than spend pay the difference to the distributor.

Aneel's proposal, defended by Economy Minister Paulo Guedes, has been the target of numerous criticisms. The public pressure was so great that President Jair Bolsonaro, Mayor Rodrigo Maia and Senate President Davi Alcolumbre publicly made a commitment not to change the rules on solar energy production in Brazil.

Aneel argues that those who receive this benefit are receiving subsidies, but, according to journalist Elio Gaspari, there would be subsidy "if the citizen consumed R$100 of kilowatts and only paid R$ 90. In this case, who has solar energy panels paid to distributors to the last penny for the energy it consumes".

The change in rules advocated by Aneel could increase the taxation of those who have solar panels by up to 60%, which for most experts could represent a huge setback for the area.

Brazilian financial market contaminated by the Bolsonaro effect

The Ibovespa index fell below 100,000 points in the last days and the dollar surpassed R $ 4,00. The current picture of volatility amid trade uncertainties and Bolsonaro's worsening in president and government approval polls.

Today, the dollar had risen to R$ 4.18 for the first time since September 2018. Currency buys gained momentum after Central Bank President Roberto Campos Neto said, according to Reuters, that the recent devaluation exchange rate is within the normal pattern.

Paradoxically, the financial market was one of the biggest supporters of Jair Bolsonaro's candidacy. Betting on a possible liberal agenda of the then-candidate. In coming to power, Bolsonaro put Paulo Guedes, a liberal in charge of the economy, but his government was largely unable to organize and lead the political debate around a reformist agenda. In fact, the statements of Bolsonaro and Guedes did more harm than good in assisting the approval work of the Social Security Reform. The main architect of this reform was the president of the Chamber of Deputies, Rodrigo Maia, who at various times collided with Bolsonaro and even Paulo Guedes.

Now, many analysts believe that the Bolsonaro government can repeat what happened to another liberal government in South America. Mauricio Macri's Argentina was the scene of a liberal who was unable to put into practice the reformist agenda at the right speed. Now, Macri, who has taken many populist measures in recent months, must lose the election to candidate to more developmental agenda.

To make matters worse, the publication of complaints against Mayor Rodrigo Maia helped increase the tension in the markets.

The financial market in Brazil is negatively impacted by the political disagreements of the current government

The political swoops between President Jair Bolsonaro and his ministers with the National Congress are worrying Brazilian investors. The Social Security Reform has been going a long way because of the efforts of the mayor of the Chamber of Deputies, Rodrigo Maia. However, Maia and other deputies involved in the Reformation continue to have disagreements with the government of Jair Bolsonaro. Most of these disagreements arise because of the complete lack of political ability of the federal government.

According to the Folha de S.Paulo newspaper, this political disarticulation added to the "pressure of parties and the lobby of public servants impinges" the Pension Reform.

Jair Bolsonaro accuses the Brazilian National Congress of emptying the Executive and supporters of the president launch the hashtag #ReajaBolsonaro

Over the weekend, President Jair Bolsonaro criticized the bill approved by Congress in May 2019. According to him, the text removes the government's powers over the appointment in regulatory agencies. "Do you want to leave me as Queen of England?" Asked Bolsonaro, referring to the monarch who is head of state of the United Kingdom, but does not exercise administrative functions. Parliamentarians denied that the Executive was void. Supporters of the president have launched the hashtag #ReajaBolsonaro (which can be translated by "come on, Bolsonaro, fight back).

According to a bill approved by Congress, the president will now appoint leaders from a triple list chosen by a commission. Text awaits the President's sanction.

The president of the Chamber of Deputies, Rodrigo Maia, responded by saying that Bolsonaro did not understand the bill.

Opposition senator Randolfe Rodrigues wrote that "the president should either change legal advice or read the approved bill before firing his machine gun at improprieties: he understood nothing! He will continue to appoint the directors of the regulatory agencies."

Therefore, the Bolsonaro administration continues to accumulate defeats in Congress, even after an attempt at rapprochement with politicians. The present government presents enormous difficulty in carrying out any type of political negotiation.

Another defeat: Brazilian Senate committee shuns Bolsonaro's decree easing guns law

The decree for the liberation of the arms proposed by the government of Jair Bolsonaro suffers a defeat in the Senate. The text was not approved. This shows a clear separation between the customs agenda defended by the government and the economic agenda, which despite the Bolsonaro government's continued inability to negotiate politically, continues to be moving in the Chamber of Deputies, mainly the Pension Reform.

Rodrigo Maia, the president of the Chamber of Deputies, has decided to maintain the economic agenda despite the ongoing criticism he makes of the current government of Jair Bolsonaro. Maia, who is an economist, said this week that the departure of economist Joaquim Levy from BNDES was "unprecedented cowardice."

Levy resigned last Sunday (16.June.2019), a day after President Jair Bolsonaro told a news conference Levy was with "a price on his head."

Joaquim Levy's departure from BNDES begins a difficult week for the Brazilian economy

The dispute between the Economy Minister, Paulo Guedes, and the president of the Chamber of Deputies, Rodrigo Maia, about the Pension Reform should continue in the coming days.

In addition, Joaquim Levy's exit from the BNDES brings more uncertainty to the government's economic team. Many analysts point out that Paulo Guedes would already be preparing a possible exit from the government. For political analyst Marco Antonio Villa, Paulo Guedes would be preparing his resignation due to economic stagnation and the changes made by the deputies in the Guedes proposed Pension Reform project.

Villa believes that Guedes can leave and blame the continuity of the economic crisis on the Chamber of Deputies and the Federal Senate. Despite this scenario, it seems that the House of Representatives and the Senate will continue with the Pension Reform and other policies aimed at improving the national economic picture.

The Central Bank's Focus report published today revised the GDP forecast to less than 1%, ie the economic picture continues to worsen. Analysts are forecasting cuts in the Selic rate because of Brazil's poor economic performance.

Economists interviewed by the Central Bank (BC) in the Focus Bulletin reduced for the 16th time the growth forecast of the Gross Domestic Product (GDP) in 2019. Thus, in the bulletin released on Monday (June 17, Brazilian economy for this year is forecast at 0.93%.

Request for the resignation of BNDES president, Joaquim Levy, leaves the Brazilian government even more ideologically isolated

Joaquim Levy's resignation request from the BNDES presidency left several members of the Brazilian National Congress with the impression that the economic team led by Paulo Guedes also became a "crisis plant." The president of the Chamber of Deputies, Rodrigo Maia, told Estado de S. Paulo newspaper that he was "perplexed" by the way the minister Paulo Guedes treated his subordinate. For him, Levy was a quality framework that he had to add to guarantee the reforms that Brazil needs right now.

After the resignation of Joaquim Levy, Bolsonaro government adds 19 casualties in the second step. This coupled with the number of ministers (3 in total) who have also left after untimely measures by President Jair Bolsonaro and his sons bring the number of people who left the government in the first six months of the administration to more than 20 people.

According to the magazine Exame, "the series of layoffs reinforces the tendency of the Bolsonaro government to entrench itself in more extreme positions".

Levy was the World Bank's chief financial officer between 2016 and 2018 and superintendent-director of Bradesco, one of Brazil's largest private banks, between 2010 and 2014. He was also finance minister during Dilma Rousseff's left-center government.

Rodrigo Maia, the president of the Brazilian Chamber of Deputies, denies that he has made a political agreement with President Jair Bolsonaro

In an interview with the newspaper O Globo, Rodrigo Maia, the president of the Chamber of Deputies of Brazil, denies that he has made a political agreement with President Jair Bolsonaro. 

According to Maia, no pact was signed. Just a conversation. The president of the Chamber of Deputies also said that the current government does not have a formulated agenda. Meanwhile, Brazil would be headed for "social collapse".

Today, the deputy that is writing the report for the Pension Reform, Samuel Moreira (PSDB-SP), said that he seeks alongside Rodrigo Maia, "build a majority before submitting the report." Moreira said he should present his text until next Thursday.

To make matters worse, in the difficult economic scenario, Brazil suspended today meat exports to China after an isolated case of "mad cow". The suspension of trade, according to the Ministry of Agriculture, is provided for in the bilateral protocol signed by the two countries in 2015. Also according to the Ministry of Agriculture, the suspension is temporary until the Asian country completes the evaluation on health information already transmitted by Brazil about the episode.

Meeting of the leaders of the three powers (executive, legislative and judicial) please the Brazilian financial market and helps to slow the dollar's rise

Today was a good day for the Brazilian financial market. Some facts pushed the Ibovespa positively.

Rodrigo Maia, the president of the Chamber of Deputies, asked Samuel Moreira, the rapporteur for the Pension Reform in Congress, to present the text of the Pension Reform proposal until June 15.
Maia wants the MPs to vote for the approval or not of the Pension Reform in the first half of 2019.

In addition, the meeting between representatives of the three Brazilian powers that took place today encouraged Brazilian investors. The representatives of the three powers have signed a pact with targets and actions for the resumption of growth in the country. The meeting was attended by President Jair Bolsonaro and the presidents of the Chamber of Deputies, Rodrigo Maia, the Senate, Davi Alcolumbre, and the Supreme Court, Dias Toffoli.

I already wrote here in this blog that the "Brazilian Financial Markets (analysts and economists) and the Brazilian businessmen bet very high on a government that was not able to respond to the height to that bet".

Now the leaders of the three powers have begun to present a beginning of political negotiation. But some political analysts believe it may already be too late for that. There are many MPs uncomfortable with the constant attacks made by Bolsonaro, his political sons and his followers on social networks.

The dollar value continues to grow in Brazil and end the day at R$ 4.0360

The trading session of the São Paulo Stock Exchange (Bovespa) closed with the dollar rising 0.47%, quoted at R$ 4.0360. In the previous trading session, on May 24, the currency was quoted at R$ 4.0170.

The support of thousands of protesters in various Brazilian cities in favor of Pension Reform and Jair Bolsonaro's government helped to optimize the Brazilian financial market. However, the demonstrations that took place on Sunday, May 26, were smaller than the demonstrations against the cuts made by the current government in the area of education, which occurred on May 15.

Among protesters who took to the streets to defend the government, there were criticisms against the Congress, the political establishment, and specially directed to the president of the Brazilian Chamber of Deputies, Rodrigo Maia (DEM-RJ).

The US political risk consultancy Eurasia evaluates that the actions in defense of Jair Bolsonaro can be positive for the advance of the Pension Reform.

Many analysts believe that this sequence of major anti-government and pro-government demonstrations points to a major political division in the country, which could become more acute if demonstrations continue to grow. The next demonstration against the government is scheduled for May 30.

Articulation of the Brazilian government will determine the behavior of the Brazilian financial market in the coming days

The first three months of the government still produces some optimism among some agents of the Brazilian financial market.

The lull in the international financial market, with Central Banks acting and China and US relation showing a more positive picture, helps maintain a certain optimism among Brazilian investors.

The Brazilian government began to move more to approve the Pension Reform. However, the government has not yet been able to consolidate an allied base for approval of its projects.

It all depends on the Brazilian government's ability to do politics. However, it appears that there is no such bargaining power in government.

There is also the danger that Bolsonaro or his sons may again publicly quarrel with some important political actor, as happened weeks ago the quarrel between the President of the Republic, Jair Bolsonaro, and the president of the Brazilian National Congress, Rodrigo Maia.

Dollar reaches R$ 4.00 and scares Brazilian economists

A public discussion between the President of the Republic Jair Bolsonaro and the president of the Chamber of Deputies Rodrigo Maia made the financial market nervous this week.

Yesterday, March 28, the tourism dollar reached R$ 4.20 and euro at R$ 4.70. As a result, the day was turbulent in the Brazilian financial market.

Today, March 29, the commercial dollar opened the session with a fall of 0.84%, being traded at R $ 3.8830 for sale and R $ 3.8810 for purchase.

To make matters worse, unemployment continues high despite improvements in recent months. In the quarter ended in February, the unemployment rate in Brazil was 12.4%, according to data from the National Survey for Continuous Household Sample (Pesquisa Nacional por Amostra de Domicílios Contínua - PNAD) published today by the Brazilian Institute of Geography and Statistics (IBGE). In the same period in 2018, the unemployment rate measured by PNAD was 12.6%.

According to Eduardo Moreira (former partner of Banco Pactual), there is a fugue of investors from  Brazil. For Moreira, a critic of the Bolsonaro administration, the first three months of government did not present any type of project and indicated a fragility in the president's capacity for articulation with the National Congress.