Vehicle Sales in 12 months - Anfavea - gov.br · 1247 783 1.59259259 Sources: BCB, Bloomberg 530...
Transcript of Vehicle Sales in 12 months - Anfavea - gov.br · 1247 783 1.59259259 Sources: BCB, Bloomberg 530...
2014 2015 2016 2017 2018 2019 2020
GDP (% YoY) 0.50 -3.55 -3.30 1.06 1.12 0.92 (*) 2.08 (*)
Consumer Inflation IPCA (% YoY) 6.41 10.67 6.29 2.95 3.75 3.31 (*) 3.60 (*)
Current Account (USD bi) -101.4 -54.5 -24.2 -15.0 -21.9 -34.7 (*) -37.8 (*)
Foreign Investment in the Country (USD bi) 87.7 64.7 74.3 68.9 76.8 80.0 (*) 80.0 (*)
International Reserves (USD bi) 364 356 365 374 375 369 (07 Nov) -
Unemployment rate (%) 6.5 8.9 12.0 11.8 11.6 11.8 (Sep) -
General Government Gross Debt (% GDP) 56.3 65.5 69.9 74.1 77.2 79.4 (**) 80.3 (**)
Ibovespa Index (BRL, % chg.) -2.9 -13.3 38.9 26.9 15.0 22.2 (ytd) -
CDS 5 years (year average) 189 475 293 165 208 154 (Nov 19) -
Interest rate (Selic Target) (%, eop) 11.75 14.25 13.75 7.50 6.50 4.50 (*) 4.50 (*)Estimates: (*) Focus Survey, Central Bank of Brazil, Nov. 8, 2019); (**) Prisma Fiscal, Oct.2019
1289
783
1.64623244
Sources: BCB, Min. of the Economy, Bloomberg
November 11, 2019
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More Brazil: The transformation of the Brazilian State
Week Highlights
• The auction of pre-salt areas in Bacia de Santos, related to the excess of production of the onerous assignment agreement, generated R$ 69,9 billion in revenues for federal, states and municipal governments.
• The COPOM Minutes reinforced the message that, starting from the additional cut signaled for December, a more cautious approach will be adopted. The text also pointed out that, with the current reduction in state participation in the economy, the changes in the credit market and financial intermediation, with a greater role of free resources and capital markets, may impact the transmission of monetary policy.
BRAZIL: MACROECONOMIC MONITOR AND REFORM AGENDA
MARKET WATCH
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Real Interest Rate (YoY %)
Swap Pre x Di 360 days discounted of the IPCA Expectation for the next 12 months
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110,000 Ibovespa Brasil Sao Paulo Stock Exchange(month avg.)
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Yield Curve (CDI, YoY %)
November 11, 2019 1 Week 3 Months
IG period average: 171
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Vehicle Sales in 12 months - Anfavea
1247
783
1.59259259
Sources: BCB, Bloomberg
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-1,327-1,535
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1,1391,3732,027
2019(Sep.)
20182017201620152014201320122011
Net Job Creation/Destruction(12-mo, thousand people)
5.90
4.31
5.91 6.50
5.84 5.91 6.41
10.67
6.29
2.95 3.75 3.31 3.60 3.75
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Consumer Inflation (%)
IPCA (YoY) Inflation Target Tolerance Interval
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Gross Domestic Product(% change in 4Q)
ECONOMY WATCH
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Trade Balance (US$ bi, 12-mo.)
Exports
Imports
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External Financing Needs (% of GDP, 12-mo.)
Current Account Direct Investment (net)
Market Expectations
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Confidence Indicators (FGV, s.a.)
Manufacturing
Consumers
20.619.9
20.3
21.921.622.222.022.4
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Household Debt Service ratio (%, YoY)
6.47.17.89.010.2
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3.02.32.52.4 1.31.61.72.51.90.6
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Public Sector Fiscal Deficit (% of GDP)
Nominal Primary
300
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3,900 New Credit Operations (12-mo accum., R$ bi)
Market-based Earmarked
A more robust recovery is still dependent on further advances in the reform agenda
The country runs a successful inflation target regime
The external accounts are one of the main pillars of the Brazilian economic stability
The credit market went through an adjustment process and now favors market-based operations
Brazil is working to improve its fiscal sustainability
Fiscal consolidation and productivity increase are crucial inputs for Brazil to grow strongly and sustainably. The new government is going forward to put in place a set of
reforms for speeding up growth and increasing potential output.
Main Measures
• Bill 1,646/19 creates measures to facilitate the collection of debt with the Social Security.• PEC 133/19 extends the reform for States and Municipalities. Senate´s second round of voting is scheduled for Nov. Savings of R$ 0.4 trillion.
• Brazil had been spending more than half of the Federal budget on social security and benefits. Gen. Govt. Gross Debt projections pointed to an unsustainable path. • The reform approved in October increases the time to retire, limits benefits, raises the rates of contribution for those who earn above the INSS ceiling and establishes rules of transition. • The reform will stabilize social security expenditures in 8.5% of GDP from 2022 on. Its impact is projected as around BRL 0.8 trillion in 10 years.• Law 13,846/19 reviews benefits and proceedings with suspected irregularities, and changes rules for granting benefits, such as reclusion allowance, death pension and rural retirement. The goal is to save about R$ 9.8 billion in the first year.
Social SecurityNext Steps
•Legislation being prepared
• Brazil needs to simplify the tax system and to reduce the tax burden on companies, the legal insecurity and the excessive legal dispute • Instrument: PEC and infra constitutional measures.
Tax ReformNext Steps
• Expand the Agreement for Economic Supplementation with Mexico• Trade agreement with the US• Trade agreement talks with South Korea, Japan, Canada• Instruments: Government decrees and resolutions
• The EU-Mercosur Free Trade Agreement was announced by both parties on June 28. The Free Trade agreement is to be ratified by all Parliaments involved.• Aims at increasing the openness degree (exports plus imports over GDP) from 22% to 30% of GDP in four years.• 2019 initiatives include: the end of quantitative restrictions on the free trade agreement of autos with Mexico; Free trade agreement with the European Free Trade Area (EFTA); modernization of tax agreements; agreement with Sweden to end the double taxation of income tax; import tax reduced to zero on over 1,000 industrial machines and equipment not produced domestically; reduction of the import tax for inputs and products of the chemical sector.
Trade LiberalizationNext Steps
• Economic Freedom Law: reduces red tape and Government intervention, facilitating the opening of new businesses. • Eliminates the need for low-risk activities to obtain any type of license; limits restrictions on working hours for commerce, services and industries; prevents laws to define prices; establishes a binding and isonomic treatment for similar situations; overrules outdated legislation; eliminates license requirements for testing, developing or implementing a product/service that does not pose high risks; impedes judicial changes in business contracts; establishes that unanswered license requests are automatically granted; extends higher court decisions to all cases; creates the “regulatory abuse” situation; among others issues.
Economic Freedom
• Broader digital integration, services provision, and database unification; Changes in the legal framework; among others.
• The Brazilian government transformed 400 public services and made them 100% digital.• Four key goals to be achieved by the end of 2020: i) launch a new digital identity, based on biometrics, for over 100 million Brazilians; ii) ensure that 70% of the over 3,000 services are digital; iii) consolidate government digital channels; iv) simplify business registration.• Current initiatives include The Digital Citizenship Platform (access and provision of digital public services); GovData (main official databases); and ConectaGov (connection of govt. systems).
Digital GovernmentNext Steps
• Submitted to Congress on Feb.• 3 Infra constitutional instruments (PL-881/2019, PL-882/2019 and PLP-38/2019)
• Changes to the Code of Criminal Procedure, Criminal Code, Criminal Law, Electoral Code, and others;• Measures will help reduce costs of doing business. Include the provisional execution of a criminal conviction after second instance sentences; the criminalization of irregular funding in elections; tighter sentences and penalties increase.
Fight corruption, criminal organizations and violent crimes Next Steps
• Provide consultation for foreign investors about legislation or administrative procedures related to investments in Brazil.
Ombudsman for Direct Investments
Main Measures
•4th Marginal Fields Round
•14th,15th, 16th Exploratory Blocks Bidding Round
•2nd to 6th Pre-Salt Production Sharing Bidding Rounds
52 PPI Projects Auctioned or Renewed
Oil and gas
•Privatization of 7 Distributors
(CELG, CEAL, CEPISA, CERON, Eletroacre, Amazonas, Boa Vista)
•Concessions of 2 Hydroelectric Plants
(Jaguara, UHE) and 2 Small Plants
•Transmission Lots and Stations
Electric Power
•16 ConcessionsAirports
•20 Projects (leasing, extension or assignment agreement)
Port Terminals
•Concession of Rodovia da Integração do Sul
Highways
•Privatization of CASEMGSupply
117 ongoing PPI Projects
•5 Extensions and 1 Concession (Norte-
Sul)Railways
•Transmission Lots•2 Auctions of New Energy• 4 Hydroeletric Plants (environm. license)
Electric Power
Airports
•6th Round (North I, Southand Central)
•15 Leasings •2 Privatizations• 2 New Investments• 1 Privatization Study
Port Terminals
•Privatization: Casa da Moeda, CEASAMINAS, Infraero shareholdings, Eletrobras, CEAGESP, ABGF, EMGEA, Correios, Dataprev, Serpro, CEiTEC, Telebrás, BB shares•PPP for COMAER
• 4 Mining Rights • 1 sale of assets
Mining
•Angra 3 Plant
NuclearPower
• 14 Marginal Fields Areas• Auction of Assignment Agreement
Oil and gas
• Carteira Verde e Amarela to ease access to the labor market.• Emprega Mais: new workforce training strategy.
•The registers of the unemployed were opened to private recruitment companies, extending the use of the national employment system dataset.
Employment Next Steps
• Congress appreciation• Instrument: Supplementary Bill.
•Bill establishing formal independence to the Central Bank of Brazil. It comprises a four- to eight-year term for the directorate of the institution, with no overlapping with the presidential mandate; and the end of ministerial status given to the president of the Bank.
Central Bank Independence (Senate PLP 19/19)Next Steps
• Congressional approval• Reduction and streamlining of subsidies granted by the Government, which amount to around 4.7% of GDP in the 2019 budget.
Subsidies reductionNext Steps
• Congress appreciation
• The Fiscal Balance Plan will aid States and Municipalities in financial distress to achieve fiscal adjustment, allowing the access to loans guaranteed by the Federal Government. Entities must provide the counterpart of recovering their payment capacity .
Fiscal sustainability of subnational entities (PLP 149/2019)Next Steps
• 21,000 commissioned positions eliminated; limitations for creating collegiates and elimination of unnecessary collegiates; restrictions for hiring civil servants and rules for hiring senior officials. • Congressional approval
Public administration overhaul (Decree 9.725/19)Next Steps
• As of Aug. 1st, there are 130 companies owned by the Fed. Govt. • On June 06, 2019, the Supreme Court ruled that subsidiaries (which comprise more than half of the companies) do not need Congress approval to be sold.• The announced target for 2019, already met, was US$ 20.0 billion.
Privatization
•CBTU
•Trensurb
UrbanMobility
•10Concessions
Railways
•São Francisco River Integration Project
Water Infrastructure
INVESTMENTS, CONCESSIONS AND PRIVATIZATIONS
•11 Concessions• 1 environmentallicense
Highways
•Concessions of Iguaçu, Lençóis Maranhenses and Jericoacoara
National Parks
•PPPs for prisons and for police comm.• Studies for street lighting against violent crimes and for socioeducational measuresPublic
Safety
•Studies for universalization andurban solid waste energy recovery Sanitation
Public Companies
•Study: child education
Education
•Concession of LotexLottery
PPI Project Portfolio
Signature bonuses of US$ 0.6 bi
Investments of US$ 2.1 bi
38 airportsAirports
Signature bonuses of US$ 0.7 bi
Extension of 15,107 km
Investments of US$ 14.8 biRailroads
Signature bonuses of US$ 0.2 bi
Investments of US$ 1.1 bi
21 terminals and 2 portsPorts
Extension of 16,574.82 km
Investments of US$ 34.9 biHIghways
Completed
In progress
Highways StudiesPublic
Hearing
TCU
Assessment
BR-364/365/MG/GO
BR-101/SC
BR-381/262/MG/ES
BR-163/230/MT/PA
BR-153/080/414/GO/TO
BR-040/495/MG/RJ (Concer)
BR-116/465/101/SP/RJ (Dutra)
BR-116/493/RJ/MG (CRT)
Integrated Highways of Paraná
BR-153/282/470/SC e SC-412
BR-158/MT
BR-364/RO/MT
4Q19
3Q20
3Q20
2Q20
4Q20
4Q20
2Q20
2Q20
3Q20 4Q20
Bidding
DocumentsAuction
4Q20
1Q20
3Q20
3Q20
3Q20
2Q21 3Q21
1Q21
Ports StudiesPublic
HearingTCU Assessment
Port of Suape/PE (SUA05) 4Q19
Port of Itaqui (IQI 03, 11, 12, 13)
Port of Santos/SP (STS 14, 14A)
Port of Paranaguá/PR (PAR12)
Rental of Solid Bulks in Port of Aratu/BA (ATU 12)
CODESA Privatization
São Sebastião Privatization
Studies for the Destatization of Port of Santos
Port of Suape/PE (SUA01)
Port of Paranaguá/PR (PAR07, 08, XX)
Terminal - Port of Santana (MCP1)
Cabling Stimulation Policy
2Q20
1Q20 2Q20
1Q20
Bidding Documents Auction
1Q21 2Q21
4Q20 2Q21
3Q20
3Q20
1Q20
2Q20
2Q20
3Q21 4Q21
Railroads StudiesPublic
HearingTCU Assessment
Bidding
DocumentsAuction
EF-334 – FIOL 1Q20 2Q20
EF-170 – Ferrogrão 2Q20 3Q20
EF-354 – Integração Centro-Oeste
North Branch - Ferroanel - São Paulo
Railroads StudiesPublic
HearingTCU Assessment Legal Opinion Subscription
Contract Extension Malha Paulista 3Q19
Contract Extension Carajás (EFC) 4Q19
Contract Extension Vitória-Minas (EFVM) 4Q19
Contract Extension MRS 2Q20
Contract Extension FCA 2Q20
Airports StudiesPublic
HearingTCU Assessment
6th round - South Block (9)
6th round - Northern Block 1 (7)
6th round - Central Block (6)
Disposals of Infraero shares (4)
4Q20
4Q20
4Q20
3Q20
3Q20
3Q20
Bidding Documents Auction
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1.62724936
The More Brazil Plan of State Transformation comprises three Proposals of Constitutional Amendments (PEC)
Institutional Framework of the New Fiscal Order• Representatives of the federal government, the Presidents of the Republic, the House, the Senate, Supreme Court, Court of Audit, governors and mayors will evaluate the financial sustainability of the Federation and ensure solid fundamentals.• Normative guidance to standardize the interpretation of budget-financial concepts. • Public programs and works get budget prediction so that resource flows are not interrupted. Ensure that future generations do not to inherit current debts.• Laws and court decisions that generate expenses will only be effective when budgeted.• Tax benefits will be reevaluated every 4 years. At the federal level, as of 2026, they will not exceed 2% of GDP. If above this ceiling, there can be no new grant, extension or renewal of tax benefits.
Unbinding, Deindexing and Disengaging• The Federal Government will not provide to subnational governments to pay judicial bonds• The share of the Workers Support Fund (FAT) allocated to BNDES will be 14%.• States and municipalities will receive and define the use of all salary-education funds. • Joint management of education and health earmarket resources.• Compulsory expenditures will be relaxed in cases of emergency fiscal dissarray. Readjustments in social security benefits and BPC by the inflation index are guaranteed.• Public revenue will not be tied to agencies, funds, or expenses, except for fees, donations, municipal and state participation funds and constitutional bindings.
Federation Strengthening• Municipalities with less than 5,000 inhabitants and own revenues below 10% of the total revenue will be incorporated by the neighboring municipality. There will be new restrictions on the creation of municipalities.
Autonomy with Responsibility• Royalties and special interests will be transfered to all states and municipalities.• The Federal Government will only provide guarantees to operations of states and municipalities with international organizations, starting in 2026.• Credit operations between entities of the Federation, directly or through funds, local authorities, foundations or state-owned companies are prohibited.• The Federal Government will be forbidden to provide financial aid to subnational entities, starting in 2026.
New Public Accounts Rules • Allows public expenditure contingency for states and municipalities.• Integration of fiscal rules (Fiscal responsibility Law, Golden Rule and Expenditure Ceilings) in all levels of government to ensure the sustainability of public debt.
Legal Security• The transfer of royalties and special participation of oil will end the disputes between the Federal Government and the states.• The use of pension funds and judicial deposits between individuals to cover for expenses of the entities is prohibited.
State of Fiscal EmergencyWhen the Golden Rule (Federal Government) is not met or current expenses are over 95% of current revenues (States), automatic adjustment triggers will come into effect, with restrictions to civil servants' payrolls, promotions, carreer restructuring and working time; prohibition to create new compulsory expenses and tax benefits, and suspension of FAT transfers to BNDES.
The PEC of the Federative Pact will transfer R$ 400 bi to States and Municipalities in 15 years
Federative Pact Emergency EmergencyFederative PactFed. Govt., when the Golden Rule is not met When credit ops. exceed capital expenses in 1 year
One-year period, renewable Two-year period
States and Municipalities, when current expenses exceed 95% of current revenues in 1 year
Cannot promote civil servantes, create new positions, change careers, make hirings and compensatory payments
Cannot create compulsory expenses and tax benefits
Allows the reduction of 25% of the servants´ working time and payment
Saved values destination determined in the budget 25% for infrastructure projects
Suspends tranfers from FAT to BNDES
Joint management of health and education resources
Convergence to Golden Rule can be included in the budget
Includes pensions expenses in the limit of expenses with personnel
Complementary Law to define indicators, sustainable debt levels and debt convergence path
Tax benefits reviewed every 4 years from 2026 on, up to a limit of 2% of GDP
Destination of tax collection and financial surplus to public debt amortization
Permanent MeasuresAutomatic Adjustment Triggers
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INTERNATIONAL ECONOMIC AFFAIRS SECRETARIAT [email protected] +55 61 2020-4292
ERIVALDO ALFREDO GOMES SecretaryCARLOS EDUARDO LAMPERT DA COSTA Undersecretary for International MarketsJÔNATHAS DELDUQUE JR. Head of International Financial MarketsJOSÉ NELSON BESSA MAIAPRISCILLA BELLE OLIVEIRA PINTODEBORAH RODRIGUES Advisor
More Brazil: The transformation of the Brazilian State
The PEC of the Public Funds will allow a decrease of R$ 220 billion in the public debt
Current Situation
• There are 281 public funds in Brazil
• There are nearly R$220 billion parked in funds while the country is in fiscal deficit
Current Issues
• Congress has no power to decide how to use funds resources
• Funds do not allow resource allocation in different areas
• Funds hinder debt management and create budgetary ridgidities
• Funds waste money on all levels of government
Measures
• Money already parked in funds will be used in the only legal way, for the payment of public debt
• New resources will be applied primarily to Poverty Eradication and national reconstruction
programs
• Most funds will be terminated at the end of the second year following the approval of the PEC
• The creation of new public funds will be made by complementary law
The Emergency PEC will free up to R$ 50 billion in 10 years