Articles and thought-pieces about unlocking a world of investment potential in Brazil.
At the 2014 BRICS summit in Fortaleza, Brazil, the five major emerging economies announced their impatience with failed reform within the International Monetary Fund.
Collectively, the BRICS account for nearly $16 trillion in GDP and 40% of the world’s population. These countries have previously drafted amendments to the IMF’s voting policy but have yet to see them come to fruition. “We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness.”
On 15th July 2014, the leaders of the BRICS signed the articles of agreement for the New Development Bank (“NDB”) and a treaty for the establishment of a Contingency Reserve Arrangement (CRA) in their first effort to balance the world financial order. The New Development Bank will have assets of $100 billion from Brazil, Russia, India, China and South Africa and will rival the World Bank and International Monetary Fund. According to a briefing note, “The agreement envisages the creation of a multilateral financial institution, the New Development Bank, which will finance infrastructure projects and sustainable development projects in BRICS countries and developing countries.”
The bank’s headquarters will be in Shanghai, India will serve as the first five-year rotating president, and Russia will be the chairman of the representatives. Each country holds an equal voting share, and the bank is available to United Nations members. This can really change the face of international development funding and the economic performance of the countries the BRIC Bank invests in.
The Agreement will only come into force when all five countries ratify the legislation.
Born in 1947, Dilma Rousseff grew up in an upper-middle-class family in Belo Horizonte. Her father was a Bulgarian immigrant. She joined the left-wing movement against Brazil’s military dictatorship which had seized power in 1964. In 1970 she was caught and imprisoned for three years, but although subjected to torture for her role in the underground resistance, she refused to break.
In 2002 she joined the committee responsible for the energy policy of presidential candidate Luiz Inacio Lula da Silva, and following his election as President, she became Minister of Energy. She was catapulted to political prominence when Lula’s chief of staff was forced to resign and Ms Rousseff was promoted to his post.
Standing for the presidency herself in 2010, she failed to get enough votes in the first round to win outright, but went on to beat Jose Serra of the Brazilian Social Democracy Party in the second round with more than 56% of the votes and became the first woman President of Brazil. This year she fought a hard campaign, winning by a tighter margin of 51.6% in the second round vote against Aceio Neves’ 48.4%.
After her victory, she was quick to acknowledge her mentor, former President Luiz Inacio Lula da Silva. In his eight years as President, he was seen by the population as Brazil’s great social transformer and still has huge popularity.
However, many Brazilians have opposed the government’s backing of sporting events such as the 2014 World Cup in the face of continuing high levels of inequality and poverty. In June 2013, an estimated million protesters took to the streets during the Confederations Cup, an international tournament which proceeded the World Cup. The protests were sparked by a rise in bus fares but soon escalated into nationwide unrest, encompassing a number of grievances including corruption poor security, transport and health systems. In a speech to the nation Ms Rousseff said she would address these concerns but maintained that the World Cup was not being financed at the expense of public services.
Ms. Rousseff’s supporters praise her commitment for social inclusion and her championing of Bolsa Familia, a social welfare scheme that has benefitted 36 million Brazilians. In May, she announced a 10% increase in Bolsa Familia payments, well above the inflation rate which was then 6%. Her success in the election was due in no small part to the overwhelming support from the roughly 40% of Brazilians who live in households earning less than 700 dollars a month. They are benefitting from her party’s social welfare scheme, as well as federal housing programmes, government sponsored vocational schools and an expansion of credit to the working class.
As President, she now faces the challenge of invigorating the country’s economy, whilst dealing with social and regional differences.
30th October 2014
Brazilian multinational energy giant Petrobras announced a new oil output record in Brazil during September. It produced an average of 2.23 million barrels of oil per day, 0.3% higher than the August record. This was mainly due to an increase in output of platforms in the Campos and Santos Basins. Five new wells started operations in both basins.
Pre-salt output reached 532,000 bpd and, with 618,000 barrels produced on 18th September, Petrobras set a new record for daily exploration in the pre-salt layer. The term “pre-salt” refers to an aggregation of rocks that hold hydrocarbon reserves and are located in ultra-deep waters in a large area off the Brazilian coast. These rocks were deposited before a layer of salt which can be as much as 2,000 meters thick. The total depth of the rocks can be up to 7,000 meters from the surface of the sea.
As Petrobras continues to develop its pre-salt reserves, production is expected to grow significantly in the coming years. The energy giant is one of the largest companies in Latin America by annual sales revenue, with its operations accounting for a large part of Brazil’s total oil and gas production. Last year, Petrobras’s average daily oil production was 1,931.4 thousand barrels per day, estimated at 90.9% of Brazil’s total oil production.
28th October 2014
24th February 2014 saw the 7th EU/Brazil Summit since the establishment of their Strategic Partnership in July 2007. The leaders met in Brussels, stating that they were reaffirming their close partnership, as they both face global challenges.
Discussions focussed on how to use and develop the full potential of the strategic partnership in 3 key areas of co-operation:
- How to ensure strong, balanced and sustainable economic growth and job creation
- How to co-operate more effectively on key foreign policy issues
- How to further their partnership on addressing global challenges such as sustainable development, climate change environment, energy, human rights and international cyber policy.
2014 promises to be a big year for Brazil with events ranging from the FIFA World Cup to the Presidential election. Here are some of the key dates in Brazil’s big year.
March 3rd & 4th : The annual Carnival
June 12th to July 13th : Brazil hosts the FIFA World Cup
June 10th to 30th : Party conventions to choose candidates. These conventions are held on Municipal, State and Federal levels. This year, parties will select candidates for President and Vice President, Governors, Federal Deputies and Senators, and State Legislators.
July : Brazil to host the BRICS Summit
July 6th : Candidates are legally allowed to begin campaigning, such as making public appearances and launching campaign websites.
August 19th : Free campaign advertising begins. The government starts providing free airtime on TV and radio to political candidates, with amount of allocation based on party representation in Congress. Paid adverts are prohibited on TV and radio, and there are strict restrictions for paid print and internet adverts.
August to October : Televised debates between Presidential candidates are likely to be held in these months, although dates have not yet been set.
October 5th : First round election. Run offs are allowed for potential candidate elections for President, Governors and Mayors. A second round takes place if a candidate fails to receive more than 50% of the vote.
October 26th : Run off election. To win the second round, a candidate must achieve an absolute majority.
January 1st 2015 : The new President will be sworn into office.
Now that Brazil is emerging as a significant force both economically and politically, especially in the strengthening of the BRICS activity and the events and trade bodies of the Southern Hemisphere, these events will now take on more significance for us all.
21st January 2014
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Facts & Figures
Brazil is the UK's largest trading partner in Latin America
Brazil is the world's no. 2 soybean producer and exporter.