Brazil's Long-Silent Business Class Pines for an End to Drama

Brazil Markets Rally on Rousseff Impeachment Prospect
  • Impeachment vote ‘allows us to be able to make decisions’
  • Investors wary of real, world's most volatile major currency

As Brazilian President Dilma Rousseff’s impeachment vote draws near, the top brass at the nation’s largest companies is beginning to break its silence.

Most business executives see little advantage in publicly taking sides in a political battle, and enough twists and turns remain in the impeachment process to make the outcome unpredictable. That’s kept corporate Brazil reticent even as the stock market has soared this year over the prospect of a more market-friendly government.

Now, with lawmakers preparing for a vote Sunday, executives are getting more vocal about how enduring months of political drama has affected their businesses. Their message? It’s time for a resolution.

“Their decision is important because it allows us to be able to make decisions again,” said Edmar Prado Lopes Neto, chief financial officer of airline Gol Linhas Aereas Inteligentes SA. “A scenario of extreme volatility is very harmful to our decision-making.”

Gol has been one of the companies hurt by Brazil’s economic crash, with capacity, or passenger seats, forecast to decline 18 percent this year. The company hired PJT Partners Inc. last month to advise on how to strengthen its unwieldy debt profile. Like other executives interviewed for this story, Lopes didn’t say whether he was for or against impeachment.

Making decisions has been tough in part because it’s hard to forecast exchange rates in this environment, Lopes said. Settling the question of who will lead the government would at least be a step in the right direction, though economic recovery will be a long slog, he said.

“Today I read unemployment for those who make the equivalent of two minimum wages a month is at a record,” he said in an interview. “Will it change for these people? It won’t change a bit. Unemployment continues rising and income dropping.”


Brazilian economic output is forecast to shrink 3.8 percent this year, according to the most recent central bank survey of economists, after declining 3.8 percent in 2015. Consumer confidence remains near record lows. Those trends, combined with several street protests that forced malls to shut their doors to the public, led to a “really bad” month of March for mall operators, Cristina Betts, chief financial officer of Iguatemi Empresa de Shopping Centers SA, said in a phone interview. 

‘Bitter’ Medicine

The impeachment vote isn’t likely to cause an immediate improvement, but it will provide more certainty, she said. “We will at least have a perspective of where we are heading,” Betts said in a phone interview. “Regardless of the result of the vote, the economy needs a long treatment and the medicine is bitter.”

Resolving the political crisis would enhance the stability of the Brazilian real, the most volatile of the world’s major currencies, said Sergio Frota, executive vice-president for the World Trade Center Business Club in Sao Paulo. Even if a decision on impeachment won’t immediately restore Brazil to growth, it could help reassure foreign investors, said Frota, whose group works on fostering cross-border business.

“They know Brazil is a serious country, with serious institutions and it is a good moment to invest,” he said in an interview. “The challenge they face is foreign exchange high volatility due to political facts. This is not good. We know several companies who got their budgets wrong due to foreign exchange. It can help you but also jeopardize your business.”

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