Brazil sovereign wealth fund
see also: Brazil: Economy , sovereign wealth fund , Brazil macroeconomic profile , private equity in Brazil
Brazil wealth fund on the way
Brazil has announced that it plans to create its own sovereign-wealth fund by June of this year in an effort to secure high returns on investments. The country holds about $195.3 billion in international reserves and wants to make better use of its cash. Bloomberg (05/05/2008)
Brazil - SWF
Country: Brazil
Established: 2009
US$ Billion: 5.9
Origin: Non-commodity
Summary:
Brazil with its growing foreign currency reserves at around $US 195.3 billion is planning to develop its own Sovereign Wealth Fund. Brazil will sell treasury bonds to finance its new sovereign wealth fund, bypassing a legislative hurdle that had limited its cash supply.
The fund is intended to defend Brazil from future financial crises and assist Brazilian firms to increase trade and expand abroad. The bond issue will allow Brazil's government to put 14.2 billion reals ($5.9 billion), or 0.5% of gross domestic product, into the fund by January 2009.
In addition, the fund would most likely focus on corporate debt instruments rather than equity stakes in firms.
News and Updates
9/4/2008
Brazil Finance Minister Expects Congress To Approve Sovereign Fund Soon
According to the Dow Jones, "Brazil's government has proposed the creation of a sovereign wealth fund of between $10 billion and $20 billion to receive surplus revenue from Brazilian exports. However, the model for the fund must still be approved by the country's congress. "We see the bill approved in coming months so that we'll set up the fund with resources we've already saved in the treasury," Mantega told reporters on the sidelines of a conference on sovereign wealth funds in Santiago. The fund could also later receive resources from the revenue from Brazil's recently discovered pre-salt oil reserves, he added. Brazil last year revealed the discovery of offshore oil reserves estimated at between 5 billion and 8 billion barrels in a pre-salt geological region oil off the country's southeastern coast. The area is seen going into production after 2010."
read more: Dow Jones
5/30/2008
Increasing Budget Surplus to help finance New SWF
According to Thomson Reuters, “Brazil will increase its primary budget surplus by at least 0.5 percent of gross domestic product to help finance a new sovereign wealth fund, Finance Minister Guido Mantega said on Friday.
Speaking a day after Brazil won its second investment-grade credit rating, Mantega said the fund would start off with 13 billion reals ($8 billion) in assets, all in reals, though at a later date the government could also buy dollars for the fund.
Mantega also said the additional savings from the increased primary surplus will help in the battle against inflation, easing pressure on the central bank to raise interest rates.”
read more: Thomson Reuters
5/7/2008
By the end of June, Brazil might finally have a SWF
According to Bloomberg, “Brazil's Finance Minister Guido Mantega said the country may create a sovereign wealth fund by the end of June in a bid to secure higher returns on growing cash holdings. 'The sovereign fund is a more efficient way to use the excess dollars that come to Brazil,' Mantega said in an interview in Brasilia today. Asked whether the fund may be started before the second half of the year, he said 'yes.'
Mantega declined to say whether the government will use cash from the central bank's international reserves or Treasury funds. The fund may start with as much as $10 billion, Mantega said in November."
read more: Bloomberg
1/15/2008
Possible SWF to deal with growing foreign reserves
Brazil might create a sovereign wealth fund with the primary aim of intervening in foreign exchange markets to counter the appreciation of Brazil's currency.
According to Brazilian Finance Minister, Guido Mantega "it will have the function of reducing the offer of dollars in the market and helping the real to appreciate less," he told the Financial Times.
Location
Banco Central do Brasil
Setor Bancário Sul
SBS - Quadra 3 - Bloco B - Ed. Sede
Caixa Postal 08670
70074-900 Brasília (DF)
Brazil
Register of Foreign Exchange Operations and Foreign Investments
+55 61 3414-1380
gabin.decec@bcb.gov.br
Website
Banco Central do Brasil
Brazil Ministry of Finance
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