Brazil

President Luiz Inacio Lula da Silva's government will not wait for Brazil's Congress to finish voting on a tax reform related to consumption before submitting its proposal for an income tax reform, Finance Minister Fernando Haddad said on Monday, Reuters reported. Haddad said in an interview with podcast "O Assunto" that the planned change in income tax, a long-standing agenda item for Lula's leftist Workers' Party, represents a crucial element of the government's plans to zero its primary budget deficit next year.

Private economists in Brazil anticipate deeper monetary easing this year and improved inflation prospects until 2026 following the government's decision to maintain the country's inflation goal at 3%, a weekly central bank poll showed on Monday, Reuters reported. President Luiz Inacio Lula da Silva has consistently blasted the country's central bank for keeping interest rates at a cycle-high of 13.75% even as inflation slows. During the first months of his administration, he also criticized inflation targets as too low, arguing that they led to an overly restrictive monetary policy.

Brazilian companies wrestling with high interest rates and growing debt loads are turning to the people who helped build them for a lifeline, Bloomberg News reported. Founders and key shareholders in Brazilian firms have committed to injecting as much as 19.3 billion reais ($4 billion) in capital to aid them so far this year, according to data compiled by Bloomberg. The rescues, which have come via equity offerings and real estate transactions, are expected to continue in months to come.

Brazil’s upcoming decision on future inflation targets is likely to define whether the central bank may start cutting interest rates at its next policy meeting, Bloomberg News reported. Central bank President Roberto Campos Neto, Finance Minister Fernando Haddad and Planning Minister Simone Tebet will meet on Thursday to review the current 3% target for the next couple years and set a new one for 2026. They may also tweak the system, getting rid of specific objectives for each calendar year and introducing a constant, medium-term inflation goal.

Brazil's delinquency rate reached its highest level in over five years in May, accompanied by a rise in average consumer interest rates, reflecting deteriorating credit conditions, according to data released by the central bank on Wednesday, Reuters reported. A broad measure of default rates for non-earmarked credit, encompassing both individuals and businesses, increased from 4.8% in April to 4.9% in May, the worst reading since February 2018. In May of last year, the delinquency rate stood at 3.7%.

Brazil’s central bank said it may be able to start cutting interest rates in August after President Luiz Inacio Lula da Silva and top members of his economic team demanded clarity about the timing of an expected monetary easing cycle, Bloomberg News reported. While policymakers hadn’t ruled out an August rate cut in a short statement issued together with their June 21 decision, the minutes of that meeting published on Tuesday were much more explicit about that possibility.

Brazilian airline Azul said on Wednesday that a group accounting for roughly 86% of holders of bonds expiring in 2024 and 2026 have agreed with an exchange offer proposed by the company to delay their maturities to 2029 and 2030, Reuters reported. The offer had been announced by the company earlier this month as part of a broader restructuring plan that also included deals with aircraft lessors for lower payments, with initially 65.5% of the bondholders having agreed with it.

Annual inflation in Brazil slowed further in early June, hitting its lowest in nearly three years as the central bank signaled it may start cutting interest rates at its next meeting if the positive scenario for consumer prices consolidates, Reuters reported. In Latin America's largest economy, 12-month inflation reached 3.4% in mid-June, data from statistics agency IBGE showed on Tuesday, slightly above market expectations of 3.36% but still the lowest since September 2020.

Brazilian retailer Americanas SA is scrambling to finalize its fourth-quarter income statement even as it redoubles efforts to get creditors on side for a bankruptcy restructuring plan, Reuters reported. Americanas, which filed for bankruptcy protection in January after uncovering 20 billion reais, some $4 billion, in accounting fraud, is now negotiating changes in the plan to win over debt holders who have previously indicated they would reject it.