Home' Trinidad and Tobago Guardian : January 14th 2016 Contents BG18 REGIONAL
BUSINESS GUARDIAN www.guardian.co.tt JANUARY 14 • 2016
With her job on
uary developing an economic plan she
hopes will restore faith in her leadership
and weaken looming impeachment pro-
ceedings against her.
The once-popular successor of former
President Luiz Inacio "Lula" da Silva
has fallen so far that it's unclear whether
she can recover. And she'll have little
room to maneuver once Congress recon-
venes in Brasilia in February: Her
approval ratings hover in the single digits,
both friendly and hostile lawmakers are
restive and Latin America's largest econ-
omy is expected to continue contracting
"Dilma will have one month with no
major problems blowing up in Brasilia
to come up with a plan to revive a fal-
tering economy," said Claudio Couto
from Brazilian think tank Fundacao
Getulio Vargas. "The key is to bring some
That confidence has been shaken by
a series of ballooning crises over the
past year. Major scandals, some of which
touch Rousseff, have combined with
tanking commodity prices to slam the
economy, which has suffered credit-rat-
ing downgrades, a sharp currency deval-
uation and 10-per cent annual inflation.
"I can't wait to stop hearing bad news
from Brasilia," said Gabriela Malvezzi, a
28-year-old psychologist in Rio. "I don't
even turn on the TV anymore. All that
I wanted was for 2015 to end."
Nelson Barbosa, who took over as
finance minister in December, is expected
to propose a stimulus package and fiscal
reforms over the next several weeks.
Ideas being floated include infrastruc-
ture projects, tax breaks for home pur-
chases and a car-swap programme to
encourage buying new vehicles. Some
are proposing a tax on banking trans-
actions and a reform of the country's
pension system to keep workers in the
job market an additional five years.
Depending on the sector, women now
can retire between 50 and 55 years old,
while men can do the same between 55
Pension reform is sure to draw the ire
of Rousseff's base. But analysts say she
must show she is serious about tackling
spending, and that she has little to lose.
Regardless of what Rousseff proposes,
Congress may not go along. The Work-
ers' Party has only 59 of the 513 members
of the lower house and traditionally has
passed legislation by forming coalitions
with other large blocs, which may find
little incentive to work with the president
It's also unclear whether even reforms
can slow the tidal wave of bad economic
news. Layoff announcements, from sugar
mills to steel factories, are a daily occur-
rence. Even Wal-Mart, one of the largest
supermarket chains in Brazil, said it
would close 30 stores in January.
A wild card is lower house Speaker
Eduardo Cunha, Rousseff's long-time
nemesis who has led the impeachment
movement based on allegations that her
administration used state-run banks to
fill budget gaps. Rousseff has denied
Cunha has said no new bills will be
voted on until lawmakers decide on the
makeup of the commission to consider
impeachment. If the commission allows
a full-chamber vote, Rousseff's oppo-
nents will need a two-thirds majority
to temporarily oust her while it moves
to the Senate.
But Cunha has his own problems: He
has charged been with accepting millions
of dollars in bribes for building contracts
in a graft scandal involving state-run oil
company Petrobras, allegations he
Attorney General Rodrigo Janot has
requested that Cunha be arrested and
removed from office, which will be
decided by the Supreme Court."Dilma
is between a rock and a hard place," said
Christopher Garman of the Eurasia
Group. "And if you have inaction, the
economic crisis will deepen." AP
Business, labour and consumer representatives on Sunday
called for lawmakers to reject a bill to reform Puerto Rico's
troubled electric utility that creditors are requiring as part of an
agreement to restructure its US$9 billion debt.
They said the proposal would deal a blow to consumers and
the economy by giving too much power to the Puerto Rico
Electric Power Authority to hike rates and establish other charges
while limiting the role of the newly created Puerto Rico Energy
Commission regulatory board.
The bill also delays implementation of renewable energy targets
and would enable the financially troubled government utility to
continue borrowing because a new direct charge to clients would
cover its debt payments.
"The commission as an independent regulatory entity should
have complete powers over the evaluation and approval of
proposed hikes and is the cornerstone of the change we should
initiate in our electricity system as a main driver of economic
development," Puerto Rico Manufacturers Association President
Carlos Rivera Velez said.
"We all have a right to energy with transparent costs that
have been legitimately approved by an independent entity.
Approving this bill will limit the participation of consumers,"
added the Rev Felipe Lozada Montanez, a Lutheran bishop and
coordinator of the Energy Roundtable coalition.
The group spoke Sunday as lawmakers return to work this
week after a holiday recess. They face a January 22 deadline to
approve legislation acceptable to creditors.
PREPA, the largest US public power utility, announced last
month it reached a deal with 70 per cent of those who hold the
agency's debt. Creditors will take a 15 per cent loss to forgive
US$600 million in debt and agreed to a five-year delay for more
than US$700 million in debt payments. AP
Business, labour groups say
new bill will hurt Puerto Rico
focuses on economy in
face of impeachment
Latin American currencies strengthened on Tuesday after the
Chinese government further moved to stabilize the yuan, whose
devaluation triggered a global selloff last week.
The Chinese central bank again allowed the currency to rise
against the US dollar, while dealers reported aggressive offshore
yuan buying by state-owned banks.
A drop in the currency had sparked concerns that China's
economy could be even weaker than previously thought, slamming
commodity prices and assets from economies exporting to China.
"Alongside the practical effort to steady the currency, officials
appear to be trying to persuade the market that the desire for
a basically stable' currency remains intact, pushing back against
expectations that the yuan will fall," Scotiabank analysts wrote
in a client note.
A recovery in oil prices also triggered buying of emerging-
market currencies. The Mexican peso rose 0.6 per cent after
hitting a new low on Monday, while the Brazilian real advanced
0.5 per cent.
Brazilian stocks also gained despite a drop in shares of state-
controlled oil company Petroleo Brasileiro SA. Petrobras, as the
company is known, trimmed its estimates of capital spending
by one-quarter for the 2015-2019 period, warning of further
cuts if oil prices and the Brazilian real keep falling. Reuters
strengthen as China
seeks stable yuan
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