Category: Macroeconomy/Finance

Information regarding Brazil’s finance sector and the country’s macroeconomy.

Central Bank anticipates production of $ 1.6 bn in banknotes

The Central Bank (BC) anticipated for this month a request for the production of banknotes, in the amount of R $ 9 billion ($ 1.6 billion), for the Casa da Moeda. This production was already foreseen in the annual schedule, but the advance was necessary to avoid the lack of bills. Since the beginning of the covid-19 pandemic, the BC has observed that there is “hoarding” of money in the country.

Senate approves MP that releases $ 1.5 billion to fight Coronavirus

The Senate approved the Provisional Measure that extinguishes the monetary reserve fund and allocates the resources, about R$ 9 billion ($ 1.5 billion), to fight the Covid-19. The proposal goes to the sanction of President Jair Bolsonaro. The text expects that the money will be distributed in the proportion of 50% for states and 50% for municipalities according to rules to be stipulated by the federal government.

Government revises estimate for GDP in 2020 to fall 4.7%

The federal government revised the official estimate for the Gross Domestic Product (GDP) of 2020 and started to forecast a fall of 4.7%. The number was released by the Ministry of Economy on Wednesday (13) through the 2020 budget revenue and expenditure report. The previous forecast, released in March, at the beginning of the crisis generated by the new coronavirus pandemic, was that the economy would grow by 0.02% this year.

Dollar reaches new historic high at R$ 5.87

The Brazilian foreign exchange market suffered a turnaround in the final stretch of the trading session, culminating in a new record for the dollar, due to a new episode of the political turmoil that hit the federal government. The American currency closed up 0.86%, at R$ 5.8691, after touching R$ 5.8860 in the worst moment of tension in the market.

BC lends $ 3 bn with financial guarantee to 27 banks

The Central Bank announced that it approved the release of R$ 17.5 billion ($ 3 billion) in loans to 27 financial institutions related to the first tranche of the Special Temporary Liquidity Line by issuing a Guaranteed Financial Bill, an initiative launched in March to support banks amidst to the coronavirus crisis. The following tranches will run until the end of 2020, reaching, in aggregate, 100% of the institutions’ reference assets.

Federal revenue falls 30% in April

Federal tax revenue fell about 30% in April compared to the same period in 2019. The drop in revenues is caused by the lower activity of the economy, due to the closing of trade and industries, and also by the postponement in the collection of taxes promoted by the government to mitigate the effect suffered by companies. There will also be a reduction of R$ 7 billion ($ 1.2 billion) in IOF for credit operations.

Financial market reduces again GDP prediction for 2020

The financial market revised for the 13th consecutive week the prediction of a fall in the economy this year. The estimate of retreat in GDP worsened from 3.76% to 4.11%. The estimate appears in the Focus bulletin, published weekly by the Central Bank (BC), with the projection for the main economic indicators. The forecast for GDP growth in 2021 remains at 3.2% and for 2022 and 2023 remains at 2.50%.

Funds drained $ 16 bn in April, record for the historical series

In April, investment funds had the second month followed by net redemption – more withdrawals than deposits – with an outflow of R$ 91.1 billion ($ 16 billion), a record for the historical series of Anbima, which started in 2002. In March, R$ 24.2 billion ($ 4.3 billion) from the fund industry. In the year, sangria is R$ 69.6 billion ($12.5 billion). Most of the April withdrawal (64%) was from fixed income funds with net redemption to R$ 58.6 billion ($ 11 billion).

Within the pandemic, the country has 0.31% of deflation in April

The IPCA, considered the country’s official inflation, fell 0.31% in April, amid falling fuel prices and falling economic activity, according to IBGE. It is also the first deflation recorded in the country since September last year, when the IPCA was -0.04%. In the year, the IPCA accumulated an increase of 0.22% and, in the last twelve months, of 2.40%, well below the 3.30% observed in the immediately preceding 12 months.