This December, Ibov broke its historic record, reaching 134,000 points. Throughout the year, the index accumulated an increase of 22% (B3).
This December, the CMN (National Monetary Council) approved a cap on credit card revolving interest rates, which have always been stratospheric for those who were unable to pay their debts on time, mainly affecting low-income earners. From January onwards, the following rule comes into force: accumulated interest cannot exceed the value of the debt (principal). Therefore, if someone took R$1,000.00 from the revolving account, the interest over the months cannot be the same R$1,000.00 (InfoMoney (a)).
Speaking of ceilings, on December 4th the National Social Security Council approved the new ceiling for payroll interest for INSS retirees and pensioners: up to 1.8% per month. The reason was the drop in the Selic rate by 0.5 p.p. at the last COPOM meeting (InfoMoney (b)).
After much discussion and conflicts during the year, even among the current government's top brass, the 2024 budget was approved, maintaining the zero deficit target. Expenses accounted for next year amount to R$5.5 trillion. What did not pass was the proposal to change the electoral fund to R$900 million, it did not happen, they maintained the stratospheric fund of R$4.9 billion (Chamber of Deputies).
Speaking of approvals... how did the legendary tax reform turn out?
Government goes, government comes, parties go, parties come... and the expected tax reform of Brazil's alien tax system was never reformed, blocking more significant investments, from micro to multinationals. And also after much back and forth this year, the first tax reform since redemocratization in Brazil was enacted by the National Congress this December through Constitutional Amendment 132 (Senado Notícias).
Finance and mathematics, everything in between. But every year Sebrae publishes a result that is always repeated: one of the main reasons for the failure of micro, small and medium-sized companies in Brazil is the lack of financial knowledge.
If you add this to the lack of basic knowledge of mathematics... we have an easily predictable equation result. And at the beginning of December, the results of PISA 2022, the International Student Assessment Program, applied every three years, were released. Result: 73% of Brazilian students were below grade 2 (in OECD countries this percentage drops to 31%), on a scale of 1 to 6, leaving the country in 65th position (Correio Braziliense).
Initially, everything would continue as it was before: maintenance of payroll relief for 17 sectors of the economy with high employability. After the PL was approved in the Chamber and the Senate, last month the president of the republic, in turn, had vetoed it. The Senate made deep-rooted promises of overthrow. This December, they fulfilled their promise: the Chamber and Senate overturned the presidential veto by a wide margin. Senate: 60 in favor x 13 against. Chamber: 378 in favor x 78 against (Correio Braziliense - 12/15/2023).
But... the government didn't let it go. On the last working day of the year, a Provisional Measure came into force with a progressive increase in the payroll, effective from April. The legislative branch, already in recess until the end of January, was not pleased at all and will discuss it when it returns, and may even overthrow the MP (Band News TV). It's the conflict of the moment: executive power x legislative power to see who's in charge more! (which in practice should not exist).
The collapse of Braskem's rock salt mine in Maceió has been reported daily, sinking centimeters per day and directly impacting several neighborhoods in the city that needed to be emptied. The IMA (Environmental Institute) then fined the company R$72 million for omitting information, environmental damage and risk of collapse. However, the institution additionally informs that it had already issued another 20 fines to the company since 2018...
And it gets worse, in mid-December Fitch Rating announced the downgrade of Braskem's investment grade rating, from BBB- to BB+, reinforcing in its rating that they do not expect this rating to improve anytime soon (Exame Invest).
Foreign tourism in the post-pandemic period benefited Brazil. According to data released by the Central Bank in December, the month of October had the highest revenue of the decade (R$3.1 billion). In total for the year, foreigners disbursed R$28 billion, well above pre-pandemic values. Leading the ranking: Argentines (Floripa?!), followed by Americans (Correio Braziliense - 06/12/2023).
And, the predictions are being confirmed. At the December meeting, COPOM reduced the Selic rate for the fourth time in a row by 0.5 p.p., now reaching 11.75%. The reasons, in summary: milder external scenario and inflation signaling a fall (UOL Economia).
In December, for the third time in a row, the Federal Reserve maintained the US interest rate between 5.25% and 5.50% per year. Remembering that before this there had been 11 consecutive increases since March 2022. However, now there have been signs of possible reductions in the next meetings, but reiterating that these will be "very careful" discussions (Financial Intelligence).
The economy of our neighboring neighbors can indeed impact our economy in one way or another, even if in a slight way. It's good to follow along then. With the inauguration of the new president, Javier Milei, some actions in the economic area were already announced in December by his Minister of Economy, Luis Caputo, reinforcing: "there is no more money". Among the nine measures announced, the ones that stand out the most are: 1 - Reduction from 18 to 9 ministries, 2 - Suspension, for 1 year, of public spending on advertising, 3 - Suspension of public works tenders, 4 - Official exchange rate rises to 800 pesos, 5 - Reduction of subsidies on energy and transport prices (Money Times).
In mid-December, the forecast for growth in rural insurance for next year was released, carried out by the National Confederation of Insurers (CNseg): growth of 23.1% (compared to 5% this year). Reason? It's not difficult to deduce: the consequences of climate change (Agricultural News).
Good news for drivers in São Paulo, the IPVA will be 5.1% cheaper in 2024. Considering average values, the reduction reaches 4.1% in prices generated at retail (InfoMoney (c)).
References: B3, Band News TV, Câmara dos Deputados, Correio Braziliense, Correio Braziliense (Impresso - 06/12/2023; 15/12/2023), Exame Invest, Infomoney (a), InfoMoney (b), InfoMoney (c), Inteligência Financeira, Notícias Agrícolas, UOL Economia, Money Times, Senado Notícias