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#CouncilBR Recap: Brazilian Government Signals Plan to Stay the Course

Brazil Finance Minister Henrique Meirelles

Finance Minister Henrique Meirelles (Image: Paulo Negreiros)

March 22, 2017


  • Michel Temer, President, Federative Republic of Brazil 
  • Henrique Meirelles, Brazil's Minister of Finance 
  • Ilan Goldfajn, Governor, Brazil's Central Bank 
  • Aloysio Nunes Ferreira, Brazil's Minister of Foreign Affairs 
  • Dyogo de Oliveira, Brazil's Minister of Planning, Development, and Management 
  • Marcos Pereira, Brazil's Minister of Industry, Foreign Trade, and Services  
  • Wellington Moreira Franco, Brazil's Minister of the General Secretariat of the Presidency  
  • Roberto Jaguaribe, President, Apex-Brasil 
  • Bernerd Da Santos, Senior Vice President and Chief Operating Officer (COO), The AES Corporation 
  • Rafael Guedes, Managing Director, Fitch Ratings
  • Donna Hrinak, President, Latin America and Caribbean, Boeing 
  • Rogerio Mendonça, President and CEO, GE Oil & Gas Latin America 
  • Enrique Ostalé, President and CEO, Walmart Latin America, India, and Africa 
  • Samantha Pearson, Brazil Correspondent, Wall Street Journal 
  • Alexei Remizov, Managing Director & Co-Head of Debt Capital Markets Latin America, HSBC Securities 
  • Susan Segal, President and CEO, Americas Society/Council of the Americas 
  • Hugo Villegas, President, Medtronic Latin America 
  • Brian Winter, Vice President of Policy, Americas Society/Council of the Americas; Editor-in-Chief, Americas Quarterly

Leia uma versão do resumo em português.

At the 2017 Latin American Cities Conference in Brasilia, which took place during a tumultuous week for Brazil’s government, President Michel Temer and several ministers—from Finance Minister Henrique Meirelles to Foreign Affairs Minister Aloysio Nunes—focused on convincing foreign investors that the crisis in Brazil is now part of the past and that the country is ready to grow again.

Apex-Brasil’s Roberto Jaguaribe kicked off Council of the Americas’ first conference in Brasilia, which he says is the start of a series of events bringing together investors and government officials. AS/COA President and CEO Susan Segal also gave opening remarks in which she highlighted the importance of coming to the Brazilian capital to understand the public policies taking place and increase confidence in the country—“something at the heart of almost every decision to invest,” she said.

Nunes also said that having the government present at such events shows “concrete proof that Brazil is open for business.” 


President Michel Temer began his keynote remarks by defending Brazil’s meat products, explaining that out of the 4,383 slaughterhouses in the country only three establishments were suspended after federal police investigations this week. Temer emphasized that agribusiness is one of the pillars of the economy and said that the meat scandal was an exaggeration and “does not reach the totality of the Brazilian slaughterhouses."

Temer also spoke about the increasing confidence in the government, celebrating the improvement in the country’s rating by Moody’s. He said the growing optimism in the financial market was a result of “reasonable government achievements,” such as lowering inflation, which fell from 10.7 percent at the start of 2016 to 5 percent today. The president said more jobs and social improvements should come from investments in significant sectors of the economy like industry and agribusiness.

The costs of doing business in Brazil

Minister of Finance Henrique Meirelles got into the details that explained the economy’s recovery. He said that the GDP of the first quarter of 2017 is expected to be 2.7 percent higher than it was in Q1 2016. Meirelles talked about the government’s expenses, noting there could be a difference of 10 percentage points in the country’s GDP forecasts over the next 10 years if the tax reform comes to fruition. The minister pointed out that the government reforms go beyond austerity measures to include reforms to the pension system. “The idea is to give various dimensions to these reforms we’re carrying out,” he explained. He also mentioned measures to simplify taxes and improve the business climate in Brazil. 

The first panel of the day explored the potential and risks for business in Brazil, with a focus on the health, finance, and retail sectors. AS/COA’s Brian Winter raised a range of questions that covered everything from tackling the “Brazil cost” to what it would take to spark inclusive economic growth in the country.

But first he asked panelists to share what they considered to be business opportunities in Brazil, to which Medtronic’s Hugo Villegas responded that optimizing health services is one priority. He later explained that improving health care is not about delivering a good product and ending up with an abundance of supply, but ensuring that patients’ health improves. HSBC’s Alexei Remizov said that the Central Bank’s change to the interest rate policy will attract capital for infrastructure, noting that it will be positive to see the outcome of current economic policy shifts and that it’s crucial for these changes to carry over from one presidency to the next. 

Walmart’s Enrique Ostalé talked about the troubles associated with Brazil’s tax structure and suggested the country look to India, which undertook its own difficult tax reform. Looking ahead to trends for the region, he cited Warren Buffett’s “ABCs” of threats to companies’ competitiveness: arrogance, bureaucracy, and complacency. In the case of Latin America, Ostalé warned that these risks relate to the lure of commodity exports for the region.  

Investors face a current global economy that is “particularly complex,” said Central Bank President Ilan Goldfajn, due primarily to the new U.S. administration’s economic policy. In particular, he highlighted the possibility of rising interest rates and protectionism in the United States that would have a direct effect on emerging markets. Still, said the economist, the global economy is also seeing a cyclical recovery that includes Brazil.

“We are quite resilient at this point,” Goldfajn said and pointed to three indicators that the country is less vulnerable to external shocks. First, Brazil’s current account deficit was 1.3 percent of GDP at the end of 2016, less than a third of what it was a few years ago. Second, foreign direct investment is up to 4.4 percent of GDP (3 percent as equity and 1.4 percent as intercompany loans). Third, Brazil’s international reserves stock is up to $370 billion, or 20 percent of GDP. After two years of recession, preliminary indicators show that the economy has stabilized, and Goldfajn said to expect a recovery starting in Q1 2017, and that growth from Q4 2016 to Q4 2017 should hit 2.5 percent. Additionally, he stressed the Central Bank’s work to “anchor” the inflation target at 4.5 percent over the next couple of years.

The reason for this turnaround is the current reform agenda, Goldfajn said. Moreover, the way to sustain this economic growth is to continue with the reforms, first with the social security reform, and then continuing with labor and tax reforms. The faster the reforms, the faster the recovery. 

Foreign trade

Foreign Affairs Minister Aloysio Nunes spoke about the objectives of Temer’s “reformist” government, which designates a “civilizing” role to foreign trade, opening new pathways for economic growth. Nunes said that Brazilian commerce generated a surplus of $48 million in 2016 and has so far grown 18.3 percent in the first quarter of this year. He spoke about the importance of inserting Brazil into the global economy by increasing the number of trade agreements, which he said depends on modernizing Mercosur. Brazil’s government should also reduce commercial barriers to attract investment, Nunes said, citing his ministry’s work toward “a rule-based world with guarantees against the risk of a protectionist spiral that can have harmful effects on the global economy.”

Marcos Pereira, the minister of industry, foreign trade, and services highlighted the specific trade agreements Brazil is focused on enhancing. For example, a new round of negotiations between Mercosur and the European Union began in Buenos Aires, Argentina on the same day of the Brasilia conference, March 21. Pereira discussed how to best integrate Brazil with countries like Mexico and trade blocs like the Pacific Alliance. He also talked about keeping U.S. ties strong, as 20 percent of foreign direct investment that comes into Brazil is from the United States.


If there’s one way Brazil wants to encourage investments, it should start pumping money into infrastructure improvements. That was the theme of the second panel of the day with experts from the aviation, oil and gas, and energy sectors. To wit, if Brazil invested 1 percent more of its GDP into infrastructure, it could create 1.3 million jobs over a decade, said moderator Rafael Guedes of Fitch Ratings.

Brazil could attract a lot more tourism if it improved its airport infrastructure in particular, said Boeing Brasil’s Donna Hrinak, citing a World Economic Forum report in which the country came in first out of 141 nations in terms of natural resources but just 41st in airport infrastructure, pulling its overall ranking down. And while steps like the recent airport auctions were good, there’s a lot more the government can do—or rather, not do—to improve conditions for business. “The private sector should be allowed to run its own airlines,” she said. “You need to recognize the value of your domestic aviation sector in your economy.” The reforms “create confidence for capital markets to develop,” she said. “The question is consistency.”

When it comes to Brazil’s vast energy demands, renewables are at this point economically competitive with thermal energy sources, said AES’ Bernard Da Santos. He said the energy company is working to bring new energy storage technology to Brazil in coming months.

How does infrastructure affect the productivity of an oil and gas company? For one thing, said GE’s Rogerio Mendonça, a reliable telecommunications infrastructure allows the company to monitor its rigs out in the ocean remotely, which is much more efficient than having to regularly send out teams for equipment upgrades.

Minister Wellington Moreira Franco of the General Secretariat of the Presidency talked about how the Temer administration has changed Brazil’s bidding and concessions system, reducing government intervention in infrasturcture projects. Moreira Franco also discussed the government’s auctions in the electricity, ports, and airports sectors, noting the “compliance” hurdles the country is facing, like the corruption cases of Lava Jato and Mensalão. Dyogo de Oliveira, minister of planning, development, and management, focused his presentation on bidding prospects in the country this year and signs of economic recovery. He discussed the structural reforms and some of the positive signs in the domestic economy, listing projects already in the second stage of the government’s investment partnership program.

Elizabeth Gonzalez translated this summary. Holly K. Sonneland and Carin Zissis contributed to this summary.