Pack away the nipple tassels and dismantle the floats: carnival has been cancelled, the Financial Times reported. Towns and cities across Brazil are being forced to scrap the annual carnival parade as the country is braced for what is expected to be the worst recession since at least the 1930s. The traditional five-day celebration, set for early February this year, normally offers respite from Brazil’s troubles — even the 2008 global financial crisis failed to damp spirits and spending.

Brazil’s government yesterday said that it repaid $14 billion advanced to it by state-controlled institutions, effectively erasing controversial public financing operations that are at the heart of impeachment proceedings pending against President Dilma Rousseff, the Wall Street Journal reported today. The move, observers say, could take some political pressure off Rousseff and her administration, which have been accused by her opponents of using the operations to hide the severity of the country’s widening budget gap.

Holdout creditors are demanding information from HSBC Holdings Plc about Argentina’s effort to raise cash, as the government seeks to end a 14-year standoff that has kept the nation out of international credit markets, Bloomberg News reported yesterday. The creditors last week served HSBC with a subpoena for documents on the bank’s involvement in the country’s attempt to raise money abroad.

Brazil’s government has settled overdue payments to state-run banks stemming mostly from budget maneuvers this year and last, which are the basis for impeachment proceedings against President Dilma Rousseff, Bloomberg News reported today. The Treasury this year paid 72.4 billion reais ($18.2 billion) it owed state banks such as Banco do Brasil, it said today. The amount is included in the 120 billion-real primary budget deficit before interest payments authorized by Congress this month.

Argentina's new government is shopping around for a second law firm to help resolve the country's longstanding battle with creditors suing it over its unpaid debt, Reuters reported yesterday. The center-right government of Mauricio Macri will publicly launch its search otoday for a new firm based in New York City to work together with Cleary Gottlieb Steen & Hamilton LLP. Argentina and the so-called "holdout" bondholders plan to meet in the second week of January to start talks toward settling the legal dispute that stems from the country's $100 billion default in 2002.

Brazil’s government accounts remained weak in November, with a budget deficit equal to 9.3 percent of gross domestic product, the country's central bank said today, according to the Wall Street Journal. The result is slightly improved from October’s 9.5 percent-of-GDP budget gap. Brazil’s gross debt was 65.1 percent of GDP, versus 64.9 percent of GDP in October, revised down from 66.1 percent, the central bank said.

Mauricio Macri clinched Argentina’s presidency last month by tapping into voters’ fatigue with a leftist political movement that had governed for more than 12 years, the New York Times reported today. But just three weeks into his four-year term, Macri’s sweeping economic changes are roiling Argentina, accentuating the divide he wanted to bridge. Macri’s government devalued the peso by nearly 30 percent in mid-December, to more than 13 pesos to the dollar from 9.8; it later strengthened slightly.

A U.S. court-appointed mediator said that Argentina's new government and holdout bondholders are to meet in the second week of January to start "substantive" talks toward settling a more than decade-old sovereign debt dispute, Reuters reported yesterday. The talks would mark a major breakthrough in the dispute, which has caused Argentina to be shut out of the international capital markets and encouraged the prior governments of both Cristina Fernandez and Nestor Kirchner to adopt unorthodox economic policies.

Argentina’s peso lost more than a quarter of its value against the U.S. dollar Thursday, a day after the new government of President Mauricio Macri said it would lift currency controls to attract investors and kick-start the economy, The Wall Street Journal reported. Within minutes of trading, the peso weakened to 13.9 per dollar from 9.8 the previous day, its biggest percentage decline since January 2002, following the abandonment of the peso-dollar parity.

Argentina’s new government on Wednesday lifted currency controls, allowing its citizens to buy dollars freely for the first time in four years and setting the stage for a sharp depreciation of the peso, The Wall Street Journal reported. The move, which officials hope will kick-start the faltering economy, is the strongest President Mauricio Macri has yet made in his bid to roll back the government interference that marked the country’s economy under the previous presidencies of Néstor and Cristina Kirchner.