Two stars feels generous once you line up Petrobras and Correios staying off the table, a 40-hour week with no wage cut, and "the largest credit policy the country has known" running through public banks. Brazil has seen this movie before, and the Dilma years ended in a deep recession after directed credit and fiscal workarounds piled up. The fiscal framework looks like the one real guardrail left, so the detail about parliamentary amendments and revenue shortfalls already testing it is worth watching closely. A right-leaning Congress could slow the state-led push, though Brasília's coalition bargaining has a long habit of buying votes with spending. The way the real and equity futures reacted on the night suggests markets are already pricing in some slippage.
Two stars feels generous once you line up Petrobras and Correios staying off the table, a 40-hour week with no wage cut, and "the largest credit policy the country has known" running through public banks. Brazil has seen this movie before, and the Dilma years ended in a deep recession after directed credit and fiscal workarounds piled up. The fiscal framework looks like the one real guardrail left, so the detail about parliamentary amendments and revenue shortfalls already testing it is worth watching closely. A right-leaning Congress could slow the state-led push, though Brasília's coalition bargaining has a long habit of buying votes with spending. The way the real and equity futures reacted on the night suggests markets are already pricing in some slippage.