Global Independent Analytics

Brazil Is Reportedly Considering Selling State Assets to Raise Cash

The country could sell part of the post office and airports as it tries to raise needed capital

Fortune reports: Brazil’s government is considering selling stakes in state-controlled assets including its postal company as well as holdings in transport, power, and insurance firms in a bid to raise capital and streamline the public sector.

Michel Temer, who is temporarily holding the office, and his administration are working with several companies and industries that allegedly will be the first targets of any move back toward sales of state-controlled holdings, the Rio de Janeiro daily O Globo said, citing anonymous members of Temer’s economic team.

The Temer’s administration has tried to adopt the similar approach twice in the past: in the 1990s and early 2000s but was sharply criticized by the leftist Worker’s Party during its 13 years in power under former president Luiz Inacio Lula da Silva and his successor, Dilma Rousseff.

After the crucial vote on Thursday Dilma Rousseff was suspended as President and the Senate voted to try her on charges of corruption and budget irregularities. Her position was immediately taken over by Michel Temer, a centrist from Brazil’s largest political party.

Brazil is mired in an acute economic decline marked by rising unemployment, high inflation and shaky consumer and business confidence. The government is running a hefty deficit. O Globo said the government is considering partial sales of tranches in Correios, Brazil’s mail carrier, and the Casa de Moeda, the national mint.

The government is considering to reiterate efforts to sell stakes in the insurance unit of Caixa Economica Federal, a significant public lender, and various port operators across Brazil in which the federal government has holdings. Besides, other privatizations may happen, including the partial sale of Infraero, the national airport operator, electricity holdings in more than 200 small companies controlled by Eletrobras, the state-run power company, and various assets held through BNDESPar, the investment arm of the national development bank, BNDES.

A spokesperson at Brazil’s finance ministry declined to comment on the issue and refused to provide further information about the government’s economic plans in the coming days.

 

By Stefan Paraber for GIA.

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