1. Chamber of Deputies advances regulation of the Tax Reform

The Chamber of Deputies has made progress in the process of regulating the constitutional amendment for the new tax system in 2023.

This week, the working group responsible for the bill presented a report discussing the general operating rules of the consumption taxes, which will replace PIS, Cofins, IPI, ICMS, and ISS following a transition period (2026 to 2033). It is now expected that the party caucuses will meet and discuss the bill.

According to Chamber of Deputies President Arthur Lira (PP-AL), the expectation is that Congress will begin the voting process on the text next week.

Câmara dos Deputados: Grupo de trabalho finaliza regulamentação da reforma tributária com modificações

2. Government offers details on 2024-2025 incentive plan for the agricultural sector

On Wednesday, the federal government provided details about the agricultural sector incentive plan for 2024-2025. The so-called Plano Safra (Harvest Plan) will allocate R$ 400 billion in rural credits for medium and large producers.

According to the administration, the amount of rural financing allocated for commercial agriculture is now 10% higher than what was provided in the past.

The federal government releases Plano Safra every year through the Ministry of Agriculture, aimed at supporting agricultural production, which is the sector that contributes the most to Brazil’s GDP.

G1: Plano Safra prevê R$ 400 bilhões em créditos para médios e grandes produtores rurais, diz governo

3. Industrial production declines by 0.9% in May

From April to May, the country’s industrial production fell by 0.9%. This was the second consecutive month of decline, with an accumulated loss of 1.7%, according to data from the Brazilian Institute of Geography and Statistics (IBGE).

As a result, the sector lost the 1.1% gain it had accumulated from February to March 2024. The results for May mean that the industry is currently manufacturing at 1.4% below the pre-pandemic levels recorded in February 2020, and 17.8% below the highest level ever recorded, in May 2011.

Of the 25 sectors surveyed, 16 declined in May. The two largest negative influences on the overall result were motor vehicles, trailers, and vehicle frames (-11.7%), and food products (-4.0%).

IBGE: Produção industrial recua 0,9% em maio, segundo mês seguido de queda

4. Government promises better economic decisions after negative market reaction

On Thursday, the economic team of the federal government announced a budget cut of approximately R$ 25 billion, which caused the US dollar exchange rate to drop and the São Paulo stock exchange index to soar.

The decision indicates economic agents are less worried about the Lula administration not being committed to fiscal responsibility.

Finance Minister Fernando Haddad has stated that the pessimistic scenario is due to a certain misalignment in the government’s communication with the private sector and not due to expansionary fiscal policy.

G1: Governo anuncia corte de quase R$ 26 bilhões em despesas obrigatórias no Orçamento de 2025

5. Rio de Janeiro will have a new stock Exchange starting in 2025

On Wednesday, the Rio de Janeiro city government announced the return of the stock exchange to the city after more than 20 years.

The operation is scheduled to begin in the second half of 2025, according to a representative of Americas Trading Group, which will be responsible for managing the new exchange. Currently, the new exchange is in the final stage of obtaining regulatory approvals from the Central Bank (BC) and the Securities and Exchange Commission (CVM).

Rio Mayor Eduardo Paes also announced a municipal law to promote the establishment of the stock exchange in the city. The new legislation proposes reducing the ISS (Service Tax) from 5% to 2% on stock exchange activities.

G1: Rio terá nova bolsa de valores; operação deve começar no 2° semestre de 2025