Brazil

President Dilma Rousseff of Brazil announced Friday that she was cutting her salary by 10 percent, reducing the size of her cabinet and slashing thousands of coveted jobs for political appointees in an effort to build support for broader austerity measures as she grapples with calls for her ouster, the International New York Times reported. The moves by the beleaguered leader, which reduce the number of cabinet ministries to 31 from 39 and extend the pay cut to the vice president, Michel Temer, and all of her ministers, reflect how Ms.

Insolvency on the Brazilian electric energy market has spread to critical levels, energy traders said on Tuesday, as hydroelectric generators balk at hefty bills for which the local regulator says they are on the hook, Reuters reported. After nearly two years of drought and long delays in completion of new generation projects such as large scale dams in the Amazon, Brazil's hydro generators have been unable to produce enough electricity to cover their supply contracts. And the energy market regulator Aneel said they must buy energy on the spot market to cover their commitments.

The Bill and Melinda Gates Foundation is suing Brazil’s Petróleo Brasileiro SA and its auditor in a New York court, claiming a vast corruption scheme centered on the state-run oil company caused the charitable organization to lose tens of millions of dollars, The Wall Street Journal reported. The foundation, started by the billionaire co-founder of Microsoft Corp. and his wife, joins a long list of plaintiffs seeking to recoup money they lost as the scandal hammered the value of their investments in Petrobras shares.

By backpedalling on its budget promises during the past month, the government has cost Brazil its prized investment-grade credit rating and sent its currency, the real, plummeting against the dollar as bond spreads soar, the Financial Times reported. Analysts are competing with forecasts of further weakening for the real, but some market observers wonder whether the moment has come for bargain-hunting among Brazilian assets. “I’m not calling the bottom necessarily,” says Fernando Honorato, chief economist of Bradesco Asset Management, referring to the Brazilian market.

Central bank President Alexandre Tombini said keeping interest rates on hold for now is enough to tame Brazil’s above-target inflation, a view that clashes with traders’ bets, Bloomberg News reported today. The inflation outlook “shows that the monetary policy strategy is in the right direction,” Tombini told lawmakers in Brasilia Tuesday.

Brazilian companies that piled on $270 billion in international debt during the boom years are seeing their funding costs rise after the nation’s credit rating was cut to junk, Bloomberg News reported today. The spread for five-year credit-default swaps to protect against a government default, one benchmark for setting what Brazilian companies must pay for external funding, has jumped 7.5 percent to 400 basis points since the downgrade, the highest since 2009. Read more.

The president of Brazil should have been ecstatic. She had just won re-election after an intense campaign in which she fiercely defended her role in making Brazil, for a few fleeting years, a rising star on the global stage, the International New York Times reported. But in the days after her victory last October, President Dilma Rousseff was worried, confronted in private deliberations with her closest advisers by signs that Brazil’s triumphs were at risk of coming undone. “We went too far,” Aloízio Mercadante, Ms.

Standard & Poor’s cut Brazil’s prized investment grade credit rating to junk on Wednesday and warned that it could lower it again in the coming months, in a major blow to President Dilma Rousseff’s government, the Financial Times reported. S&P attributed the move, which surprised analysts who had not expected such a downgrade until at least next year, to government backpedalling on its budget deficit targets as well as what it described as divisions in Ms Rousseff’s cabinet over fiscal policy.

During a previous stint in government, Brazilian finance minister Joaquim Levy won the nickname “Edward Scissorhands” after the 1990s film because of his ability to cut public spending, the Financial Times reported. Ever since President Dilma Rousseff brought him back to Brasília in January to play the role of the government’s economic bad cop, Mr Levy has delivered a blunt warning: either Brazil gets its fiscal house in order or it will see its debt relegated to junk status. “The money is gone,” the former banker said in May, referring to recent years of free-spending.

Brazil’s troubled economy showed more signs of deterioration on Tuesday as consumer confidence sank to a record low and unemployment climbed, The Wall Street Journal reported. It is the latest blow to a country beset with high inflation, a slumping currency and a festering corruption scandal that has left President Dilma Rousseff with approval ratings in the single digits. More bad news is expected Friday, when a report on gross domestic product is projected to show that Brazil’s economy is officially in recession.