Sunday, May 9, 2021

Dollar renews February minimum with Budget on the radar; Ibovespa retreats – Prime Time Zone

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Mercado follows developments to define federal government spending this year; international pessimism contaminates the Brazilian stock exchange

Brazil AgencyDollar retreats with expectation of sanction of the Budget of 2021 by the president Jair Bolsonaro

O financial market Brazilian operated on Thursday, 22, a holiday return, waiting for the definition of the Budget 2021 by President Jair Bolsonaro (without a party) after weeks of stalemate between the economic team and the legislature. The president has until today to decide whether to sanction or veto the bill approved by Congress at the end of March. The head of the Executive signed the previous day the change in the Law of Budgetary Guidelines (LDO) that removed from the fiscal target – with an estimated gap of R $ 247 billion -, government actions to fight against new coronavirus pandemic, including employment protection programs and credit lines for micro and small entrepreneurs. With this scenario, the dollar closed with a drop of 1.73%, to R $ 5.455, after hitting a maximum of R $ 5.560 and a minimum of R $ 5.466. This is the lowest price for the US currency since February 24, when it closed at R $ 5.427. Following the negative climate abroad, the Ibovespa, a reference from B3, ended the day with a drop of 0.53%, at 119,420 points. The trading session was unstable for most of the day, but it accentuated a fall in the afternoon after international agencies said that the President of the United States, Joe Biden, intends to raise taxes for the richest people.

Bolsonaro has until Thursday to decide whether to sanction or veto the 2021 Budget approved by Congress at the end of March. The text, which defines the federal government’s spending this year, was the target of an impasse between the economic team and the legislature after the R $ 26.5 billion increase in parliamentary amendments with the cut in mandatory expenses. After weeks of negotiations, the two sides reached consensus with the approval of changes in the LDO by deputies and senators on Tuesday, 20. The new text frees the opening of extraordinary credit, that is, outside the spending ceiling, for initiatives government to mitigate the effects of the pandemic. According to the Ministry of Economy, the approval will allow, “in the next few days”, the allocation of R $ 10 billion to the Emergency Benefit of Maintenance of Employment and Income (BEm) and R $ 5 billion to the National Support Program for Microenterprises and Small Companies (Pronampe).

The changes in the LDO also authorize the Executive to block budgetary appropriations for discretionary expenses, as expenses that are not mandatory, such as investment in works or scientific research, and that represent less than 10% of the Budget, are called. According to the federal government, at the request of the Ministry of Economy, the president vetoed the provision that allowed the signing of contracts and transfers and donations to municipalities in default with the Union. This measure would weaken the control of public accounts and the inspection of the correct use of the amounts transferred by the Federal Government. This was the only vetoed provision in the proposal. The project will go into effect immediately and will only be valid for the year 2021 ”, informed the Secretariat of the Presidency in a note.

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