Brazil’s Ombudsman Says 8 Years of Lula Saw US$ 38 Billion Stolen from Country’s Coffers

Lula with Indian headdress The numbers come from Brazil’s government itself. Brazilian politicians and public employees skimmed at least a staggering US$ 37.7 billion from the nation’s coffers in just eight years of corruption cases from 2003-2010, the Brazilian media are reporting, based on numbers from the country’s Public Accounts ombudsman.

Citing federal documents of the office in charge of trying to recover the funds, the report said that it only managed to recover in the eight years, US$ 845 million.

The figures however pale in comparison to another new estimate: newsmagazine Veja cited the influential São Paulo chamber of industries as saying a jaw-dropping more than US$ 400 billion are thought to have been stolen from the government and taxpayers in the past 10 years. This is equivalent to 2.3% of Brazil’s GDP annually.

Five ministers in President Dilma Rousseff’s cabinet have been forced to step down amid corruption allegations in just three months. The last one. Orlando Silva, from the Sports ministry, was forced to resign just last night.

Silva was responsible for 2014 World Cup organization and logistics. The former minister was accused of graft and kickbacks. Rousseff tried to keep him after the scandal started less than weeks ago, but changed her mind after the Supreme Court started an investigation on the misdeeds of that ministry.

Heavy Taxes

Fitch Ratings informed it has decided to maintain Brazil’s BBB investment grade credit rating and predicted the outlook for the Latin America’s largest economy would remain stable.

“Brazil’s BBB ratings are supported by its strong external liquidity buffer with foreign exchange reserves at 350.6 billion dollars, its net sovereign external creditor status, the flexibility of its macroeconomic policy framework, and a healthy banking system,” the agency said in a report Tuesday.

Fitch said those strengths will help Brazil in a period of volatility on the world market and assist the country in counterbalancing its weaknesses in other areas, which include the “relatively high general government debt burden, limited fiscal flexibility and relatively slow pace of economic reforms.”

However, Fitch criticized the weak infrastructure and heavy tax burden in Brazil, saying these problems constrain the country’s business environment.
The Brazilian economy has slowed down this year due to tightening monetary and fiscal policies. Its economic growth in 2012 also will be somewhat compromised by external factors caused by the debt crisis in the US and Euro zone.

Despite this unfavorable scenario, Brazil still has favorable medium-term growth prospects, said Fitch.

“While Brazil is likely to grow below its potential rate in 2011 and 2012, its fiscal and external credit metrics are not expected to be materially affected by the economic slowdown,” said Shelly Shetty, head of Fitch’s Latin American Sovereign Ratings.

US$ 1 Trillion Debt

Brazil’s total federal debt rose in September as the Treasury issued new debt at home and abroad, the government reported this week. The country’s federal debt load increased 2.3% in the month to 1.809 trillion reais (1.02 trillion dollars), from 1.768 trillion reais in August, the Treasury said in a statement.
 
Brazil’s domestic debt increased 1.8% 1.724 trillion reais, while the outstanding federal debt denominated in foreign currencies increased 12.4%, to 84.8 billion reais.

Non-resident participation in the debt fell to 194.65 billion reais, or 11.29% of the total, in September, from 198.95 billion reais, or 11.75% of the total in August.

The government isn’t worried about the small decline in foreign demand for Brazil’s debt, said Finance Ministry Debt Coordinator Fernando Garrido, at a press conference following the release of the information.

“This decline wasn’t identified as significant or relevant,” he said. “It could be related to movements by a small group of investors. We continue to believe in increased foreign investor participation over time.”

The Finance ministry continues to evaluate the possibility of an overseas debt offer this year, but hasn’t made any decisions yet about when that will happen, Garrido added.

Brazil’s government has aimed to lengthen its debt profile and minimize its exposure to interest-rate risk through increased sales of fixed-rate and inflation-indexed debt.

The government reported that the average maturity of all debt fell to 3.67 years in September from 3.71 years in August, while for domestic debt it fell to 3.53 years from 3.59 years in August. The average maturity of foreign debt was unchanged at 6.56 years.

The proportion of all debt maturing in the next 12 months increased to 24.9% in September, from 23.47% in the previous month. For domestic debt the figure rose to 25.52% from 24.07% and for foreign debt it increased to 12.25% from 9.86%.

The average accumulated cost of all debt over the past 12 months increased to 12.97% in September from 12.25% the previous month.

Currency Misalignments

The Brazilian government has proposed further study at the World Trade Organization on the effects that exchange rate fluctuations have on international trade, the foreign ministry said this week.

Brazil has complained repeatedly that some countries are manipulating their currencies to give them an unfair trade advantage, and wants the WTO to consider measures that could be taken to deal with currency “misalignments.”

The WTO has reviewed available information regarding the issue and concluded that, while the effects of movements in nominal exchange rates aren’t noticeable in the long run, in the short-term they can “alter relative prices and affect both the allocation of resources between non-tradable and tradable sectors of international trade flows,” according to a copy of a speech given Monday by Brazil’s representative at the WTO, and provided by the foreign ministry

The WTO has already decided to hold a “dedicated workshop” to further study the issue. The Brazilian representative, Roberto Azevedo, suggested the workshop take place in the first quarter of 2012, that it analyze the situation from the perspectives of both the public and the private sector, and that its findings be made available to the public at large.

Mercopress

Tags:

You May Also Like

Change or I’ll Live, Chávez Tells Brazil and Mercosur

Venezuela is interested in becoming a member of a “new Mercosur,” but if there’s ...

The Summer of the Topless

José Carlos Dias, the Minister of Justice himself, entered the discussion of topless bathing ...

Naming Your Pet in Brazil Might Get You in Trouble with the Law

A Brazilian legislator proposed a law to make it a crime to give Brazilian ...

Whoever Becomes Brazil’s Next President It Won’t Be an Anti-Lula

As a cooling Rio summer sees the refreshing “March waters” clean the streets of ...

A Fund to Bolster Trade Between Brazil and Venezuela

Brazil’s National Economic and Social Development Bank (BNDES) is studying the creation of the ...

Paraguay Tells Brazil: We Don’t Want a Friendly Hand. But Justice and Our Money

Fernando Lugo, the president of Paraguay, said he is looking forward to the coming ...

Sweat of Your Brow? No, Government Coupons

President Lula da Silva hasn’t read the Bible. Or why would he say, "It ...

Brazil to Dominate Global Trade of Beef, Chicken, Sugar and Soy

Brazil should dominate a large share of foreign trade of agricultural products over the ...

Brazilian Government Sets Rules on How to Prepare National Drink Caipirinha

The Brazilian government has published legal guidelines for the popular caipirinha, the most common ...

Brazilian protesters want jail for Lula and Cardoso

Lula Didn’t Get a Blank Check from the Brazilian People

The October, 2006, reelection of Luiz Inácio Lula da Silva as president of Brazil ...