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The CPI should increase political instability and postpone the reform agenda, writes Mario Braga.



The CPI should increase political instability and postpone the reform agenda, writes Mario Braga.

The CPI (Parliamentary Commission of Inquiry) on how the government dealt with the covid-19 pandemic has a political evolution that will have implications for the Brazilian economic environment. While the government coalition has made efforts to defend its administration, the fact remains that many new facts revealed by senators – from the existence of a cabinet, parallel to proven delays in responding to pharmaceutical companies going through new allegations of attempted corruption in the procurement of vaccines – this should affect not only on the image of the president, but also on his support in the Congress itself. This means that the government’s business support agenda is likely to have further delays or blurring.

What can you expect from the CPI results? First, the very composition of the CPI – mostly independent and opposition senators – means that a negative outcome for the government is almost inevitable.

The CPI is expected to provide a compelling account of the government’s refusal to buy vaccines, its investment in ineffective drugs, and the omissions that led to oxygen shortages in Amazonas in January.

In addition, testimony about alleged corruption schemes in the procurement of vaccines is already beginning to lead to specific consequences beyond the CPI, such as a request from the Attorney General’s Office to investigate whether the President committed a malfeasance in office. These advances increase the risk of government exhaustion, especially with the widespread media coverage of the commission’s work.

In Congress, CPI reflexes should weaken the ruling coalition by limiting the executive’s ability to approve proposals in its best interest. Legislators must take advantage of the president’s vulnerable position and push their own plans, making it difficult to secure support for austerity measures advocated by the economic team.

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Thus, the environment became less inclined to approve comprehensive tax and administrative reforms over the next 18 months. The cutting of tax reform is one of the signs of the erosion of the original plans of the Minister of Economics Paulo Gedes, and the proposals already presented should still be softened in Congress.

Focus on elections

Bolsonaro’s reaction to the changing political landscape can also affect the business environment. According to polls, the president’s approval ratings remain low. In addition, the STF rehabilitated the political rights of former President Luis Inacio Lula da Silva (2003-2010), who currently leads polls on intent to vote in the 2022 presidential election.

Although the elections will take place only 15 months later, and Lula’s leadership is far from final, Risk control hopes the government will reconsider its support for unpopular policies, and is more willing to resort to patronage negotiations to secure support for Bolsonaro’s re-election. Both trends have a significant impact on the formation of economic policy.

To limit the damage to its popularity by the CPI and with an eye on the 2022 elections, Bolsonaro must resort to increasing government spending. To this end, the government is taking advantage of an indirect improvement in the external scenario and higher-than-expected growth in the domestic economy, which should lead to short-term fiscal relief. In parallel, the discourse on financial responsibility of Guedes will continue to lose ground next year.

It was in this context that the reaffirmation of the need for a new extension of the “emergency aid” this year was reaffirmed. The pandemic mitigation program saw a significant increase in the president’s approval ratings when it was first adopted in 2020, and the government hopes that the new version, albeit less reliable, will have similar effects in 2021. The Bolsa Família program planned for this year follows the same logic.

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Bolsonar should also continue to use populist measures targeting certain groups of supporters as a strategy to maintain electoral competitiveness in 2022. In this context, the focus is on loosening gun controls, tax incentives for the gaming industry, fuel subsidies for truck drivers and toll exemptions for motorcyclists (in future road concessions), and real estate loan subsidies for employees. police.

In an effort to expand its base, the government must place increasing emphasis on the socially conservative agenda of Congress, which includes agendas such as regulating home education (home schooling). The debate over the implantation of printed ballot papers for the 2022 election is another topic that will remain in presidential speeches as it is well received by the pickpockets.

While these topics have been part of the presidential campaign since they have become the focus of attention at the Palácio do Planalto, they will lead to a dispersal of government efforts and should further complicate the promotion of programs, which could lead to an improved business environment in the country.

Thus, when trying to distract public attention from the negative impact of the CPI or trying to maintain support for its electoral base ahead of the 2022 elections, issues previously considered central to business, such as structural reforms, should remain in place. in the 2nd plan, without significant progress in the next 18 months.

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The dollar continues to reflect the political scenario



The dollar continues to reflect the political scenario

Yesterday, financial agents evaluated the opposite decision of the Federal Supreme Court (STF) regarding the so-called secret budget. In addition, a decision was made by STF Minister Gilmar Méndez to issue an injunction that would exclude the Bolsa Família from the spending cap rule, with investors trying to understand how this measure would affect the processing of the transitional PEC in the Chamber of Deputies. Oh this PEC!!!!

Since he is an exchange investor, any reading that the budget will be exceeded or become more flexible will negatively affect the exchange market, whether through the PEC or in any other way. We will continue with volatility today.

Looking beyond, the US Central Bank (Fed), although slowing down the pace of monetary tightening at its December meeting, issued a tougher-than-expected statement warning that its fight against inflation was not yet over, raising fears that rising US interest rates will push the world’s largest economy into recession.

The currency market continues to react to political news. The voting on the PEC is saved for today. It is expected that it will indeed be reviewed to open the way tomorrow for discussions on the 2023 budget.

Yesterday, the spot price closed the selling day at R$5.3103.

For today on the calendar we will have an index of consumer confidence in the eurozone. Good luck and good luck in business!!

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Andrés Sánchez consults with the Ministry of Sports, but refuses a political post.



The former president of the Corinthians dreams of working for the CBF as a national team coordinator. He was consulted shortly after Lula’s election.

Former Corinthians president Andrés Sánchez was advised to take a position in the Ministry of Sports under the administration of Lula (PT). However, he ruled out a return to politics. dreams of taking over the coordination of CBF selectionHow do you know PURPOSE.

No formal invitation was made to the former Corinthian representative, only a consultation on a portfolio opportunity with the new federal government, which will be sworn in on January 1, 2023.

Andrés was the Federal MP for São Paulo from 2015 to 2019. At that time he was elected by the Workers’ Party. However, the football manager begs to stay in the sport, ruling out the possibility of getting involved in politics again.

Andrés Sanchez’s desire is to fill the position of CBF tackle coordinator, which should become vacant after the 2022 World Cup. Juninho Paulista fulfills this function in Brazil’s top football institution.

The former president of Corinthians was in Qatar to follow the World Cup along with other figures in Brazilian football. During his time in the country, he strengthened his ties with the top leadership of the CBF.

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The EU has reached a political agreement on limiting gas prices – 19.12.2022



Germany sentenced Russian to life imprisonment for political murder by order of Moscow - 12/15/2021
BRUSSELS, DECEMBER 19 (ANSA). European Union countries reached a political agreement on Monday (19) to impose a natural gas price ceiling of 180 euros per megawatt hour (MWh). The main sources of income for Russia and the minimization of the use of energy as a weapon by the regime of Vladimir Putin.

The agreement was approved by a supermajority at a ministerial meeting of member states in Brussels, Belgium, after months of discussions about the best way to contain the rise in natural gas prices in the bloc caused by Russia’s invasion of Ukraine. .

The value set by the countries is well below the proposal made by the European Commission, the EU’s executive body, in November: 275 EUR/MWh. However, the countries leading the cap campaign were in favor of an even lower limit, around 100 EUR/MWh.

Germany, always wary of price controls, voted in favor of 180 euros, while Austria and the Netherlands, also skeptical of the cap, abstained. Hungary, the most pro-Russian country in the EU, voted against.

The instrument will enter into force on 15 February, but only if natural gas prices on the Amsterdam Stock Exchange exceed 180 euros/MWh for three consecutive days. In addition, the difference compared to a number of global benchmarks should be more than 35 euros.

Italy, the EU’s biggest supporter of the ceiling, has claimed responsibility for the measure. “This is a victory for Italy, which believed and worked for us to reach this agreement,” Environment and Energy Minister Gilberto Picetto tweeted.

“This is a victory for Italian and European citizens who demand energy security,” he added.

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Currently, the gas price in Amsterdam is around 110 EUR/MWh, which is already a reflection of the agreement in Brussels – in August the figure even broke the barrier of 340 EUR/MWh.

However, Russia has already threatened to stop exports to countries that adhere to the ceiling. (ANSA).

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