Ref. Ares(2019)2673845 - 17/04/2019
9.
After an upward spike on Brazilian stocks and currency following Jair Bolsonaro’s
(PSL) first round victory, the Ibovespa stock index lost 2.8%. The dollar ended its
recent decline and firmed at BRL 3.77, down 1.97%, by the end of the week: According
to specialists, the decline reflected market investors’ reactions to Bolsonaro’s statements on
the privatization of Brazilian energy companies in an interview on 10 October to
Bandeirantes television network. The candidate expressed his opposition to the privatization
of Eletrobras and Petroras and criticized the oil company’s independent pricing policy for
gasoline and other derivatives. These comments run counter to the positions defended by
Bolsonaro’s economic advisor Paulo Guedes and, according to specialists, raised concerns
as to the candidate’s commitment to a market friendly economic policy.
10. According to the International Monetary Fund (IMF), Brazil’s public debt will be the
second largest among emerging nations in 2019, behind only Venezuela: The
announcement was made at the Annual IMF-World Bank meeting (12-14 October) in
Indonesia. According to the IMF, the debt next year will reach 90.5% of gross domestic
product and without a social security reform it will increase to 98.3% in 2023. The IMF’s
gross debt calculation differs from that of the Central Bank, since it includes government
bonds that are issued but not yet traded on the market such as loans to state-owned
companies. IMF’s managing director, Christine Lagarde, recommended that the next
president should work to restore fiscal sustainability and undertake structural reforms to
improve credit, infrastructure and trade liberalization. She also pointed to the need to
promote Social Security reform and the continuity of monetary policy to stimulate the
economy. The IMF also reduced Brazilian economy's growth estimates for 2018 from 1.8% to
1.4%.
Sign-off:
Art. 4(1)(b)
Copy to:
EEAS:
SOBRAL, SCHMID, SERRANO,
Art. 4(1)(b)
LEFFLER,
Art. 4(1)(b)
EEAS
POLICY COORDINATION (EEAS), EEAS REPORTING, EEAS MD, EEAS DMD, EEAS
DSG CSDPCR, EEAS PSC, EEAS PSC CHAIR, EEAS CO, EEAS EU INTCEN; EEAS.
STRAT.POL.PLANNING; EEAS SG.A3; EEAS SG; EEAS ECO; EEAS CPCC SECRET.;
EEAS EUMS
EU DELs: HOD ARGENTINA, HOD BARBADOS, HOD BOLIVIA, HOD CANADA, HOD
CHILE, HOD COLOMBIA, HOD COSTA RICA, HOD CUBA, HOD DOMINICAN REPUBLIC,
HOD ECUADOR, HOD EL SALVADOR, HOD GUATEMALA, HOD GUYANA, HOD HAITI,
HOD HONDURAS, HOD JAMAICA, HOD MEXICO, HOD NICARAGUA, HOD PARAGUAY,
HOD PERU, HOD TRINIDAD & TOBAGO, HOD UN, HOD URUGUAY, HOD USA, HOD
VENEZUELA
DEL BRAZIL:
Art. 4(1)(b)
DEVCO: S. MANSERVISI, J. BUTKEVICIENĖ,
Art. 4(1)(b)
DG TRADE: H. KONIG, Art. 4(1)(b)
Art. 4(1)(b)
Art. 4(1)(b)
DG AGRI: J. CLARKE,
Art. 4(1)(b)
FPI: Art. 4(1)(b)
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DG CONNECT:
Art. 4(1)(b)
CAB JUNCKER: R. SZOSTAK
CAB MOGHERINI: S. GRASSI; E. PETROCELLI
CAB MIMICA: N. BEHRNDT
CAB MALSMTRÖM: M. CEBALLOS BARON
CAB TUSK – European Council
(Ares + SECEM): Art. 4(1)(b)
GEN. SEC. COUNCIL (
Ares + via SECEM): J TRANHOLM-MIKKELSEN; Art.4(1)(b) ; L
SCHIAVO; Art.4(1)(b)
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