Brazil to open new branch of BRICS Bank

. Jul 16, 2020
Brazil HQ of BRICS Bank gets go-ahead BRICS leaders during 2019 summit in Brasília. Photo: Isac Nóbrega/PR

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New BRICS Bank branch to open up shop in Brazil. The underwhelming launch of 5G networks. And Brazil’s new coronavirus milestone.

Brazil HQ of BRICS Bank gets go-ahead 

The Senate approved the creation

of a Brazilian branch of the Shanghai-based New Development Bank — NDB, commonly known as the BRICS Bank — in São Paulo. The new office will serve as the bank&#8217;s headquarters in the Americas. The bank will also have a representation bureau in capital city Brasília.</p> <p><strong>Context.</strong> Created in 2014 during the 6th BRICS Summit, the NDB project aims at diminishing the infrastructure gap in emerging markets — a deficit <a href=";view=article&amp;id=34684">estimated</a> at between USD 1 to 1.5 trillion per year, according to the Brazilian Institute of Applied Economic Research (Ipea).&nbsp;</p> <ul><li>Since its inception, the NDB has lent USD 621 billion to Brazilian projects —&nbsp;around 10 percent of the bank&#8217;s loan portfolio. Brazilian authorities believe that is too small of a share for a country of Brazil&#8217;s size and that a local office will increase the visibility of local projects vis à vis Shanghai.&nbsp;&nbsp;</li><li>With the São Paulo HQ, Brazil takes on a bigger role in the bank, after picking its newly-inaugurated chair in Marcos Troyjo, a former Secretary of Foreign Trade at the Economy Ministry.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/3195491" data-url=""><script src=""></script></div> <p><strong>Why it matters.</strong> Besides more actively prospecting new projects to finance, the NDB office in Brazil will raise funding in the local financial market, in order to provide loans in Brazilian Reais, thus reducing the risks of fluctuating foreign exchange rates to borrowers.</p> <p><strong>New loan.</strong> The Economy Ministry&#8217;s foreign financing department issued a report in favor of taking out a USD 1-billion loan from the BRICS Bank, which had been proposed late in March. The money will be used to aid vulnerable populations hit by the pandemic and is part of the bank&#8217;s Covid-19 relief fund.</p> <ul><li>The Brazilian government is simultaneously trying to secure another USD 3 billion with other multilateral institutions, such as the Inter-American Development Bank, the World Bank, the French Development Agency, and German state-owned development bank KfW.</li></ul> <p><strong>China-dependent.</strong> The BRICS were once heralded as the future of the world’s economy but the five member nations have grown unequally, with China becoming a global superpower and the remaining quartet sputtering along modestly. As reporters Euan Marshall, Natália Scalzaretto, and Lucas Berti described during their coverage of the 2018 summit, <a href="">the BRICS now look more like &#8220;China &amp; Co.&#8221;</a></p> <hr class="wp-block-separator"/> <h2>5G? More like 4.5G</h2> <p>Following Claro, telecom giants TIM and Vivo announced they will <a href="">launch 5G networks in Brazil</a> later this year. While the government has yet to auction the 5G spectrum, these companies will use a technology called DSS (Dynamic Spectrum Sharing). This allows the deployment of both 4G and 5G on the same frequency band, dynamically allocating spectrum resources between the two technologies based on user demand.</p> <p><strong>Why it matters.</strong> As the U.S. Senate Republican Policy Committee <a href="">puts</a> it, &#8220;the country that leads the world in the adoption of 5G technology will have a distinct technological, economic, and national security advantage over other countries.&#8221;</p> <p><strong>But … </strong>5G could be up to 100 times faster than 4G. In Brazil&#8217;s case, these networks will be around only 10 times faster. Moreover, DDS-based networks won&#8217;t provide the other benefits of 5G beyond ultrafast connections, such as the ability to support millions of devices without any latency.&nbsp;</p> <ul><li>This is precisely the key feature of the technology, which would allow for the so-called &#8220;fourth industrial revolution.&#8221;</li></ul> <p><strong>5G diplomacy.</strong> As things stand, Brazil&#8217;s 5G auction is set to happen early in 2021, though it has already been postponed on numerous occasions. The big question is: will Brazil ban or limit the participation of <a href="">China&#8217;s Huawei</a>?&nbsp;</p> <ul><li>The UK has been the latest country to bar the Asian giant tech company from its 5G grid. But <a href="">Brazil&#8217;s dependence on China</a> — diametrically opposed to President Jair Bolsonaro&#8217;s policy of total alignment with the U.S. — makes things muddier.</li></ul> <hr class="wp-block-separator"/> <h2>2 million coronavirus cases today</h2> <p>Later on today, Brazil is set to become only the second nation in the world to surpass the mark of 2 million coronavirus cases. The 7-day rolling average for new daily new infections has plateaued at around 36,000 —&nbsp;and over 1,000 for daily deaths.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2641109" data-url=""><script src=""></script></div> <div class="flourish-embed flourish-chart" data-src="visualisation/2641192" data-url=""><script src=""></script></div> <p><strong>Trending up.</strong> According to the Oswaldo Cruz Foundation, the spread is increasing again after slowing down over the last three weeks —&nbsp;which was predicted by nearly all experts as states moved toward reopening non-essential activities. Brazil&#8217;s South is the region where the coronavirus is advancing the quickest, leading 18 mayors in Santa Catarina state to impose municipal lockdowns. In Tubarão, infections jumped from 542 to 944 in ten days. Laguna, a neighboring municipality, experienced an even more amazing surge: cases went from 100 last week to 800 on Tuesday.</p> <p><strong>Patient Bolsonaro.</strong> President Jair Bolsonaro announced on Wednesday that he has tested positive for coronavirus a second time and will remain in social isolation. The government said his health is &#8220;progressing well.&#8221;</p> <p><strong>Vaccines.</strong> Brazil should expect to contribute around USD 2 billion to the Global Alliance for Vaccines and Immunization (Gavi) if it wants to receive enough Covid-19 vaccines in the first round of vaccine distributions. The projection stipulates that the country will initially need to vaccinate 20 percent of its population to achieve a basic level of immunity.</p> <ul><li>Another potential Covid-19 vaccine, developed by British pharmaceutical firm AstraZeneca and Oxford University (and tested in Brazil), could be cleared for public use in June 2021, according to the Federal University of São Paulo.</li></ul> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Sanitation. </strong>President Jair Bolsonaro signed the new legal framework for sanitation services into law. He vetoed, however, one article that allowed states and municipalities to extend contracts with publicly-owned companies for another 30 years — a condition imposed by lawmakers. Congress now plans to strike the veto down, essentially pushing back the entry of private players into several markets, a move considered critical for the <a href="">universalization of basic sanitation</a>. On the flip side, the mechanism would provide state-owned companies with some breathing room before the changes.</li><li><strong>Congress.</strong> Lawmakers will also analyze 28 controversial presidential vetoes today, including one restricting which workers can access the BRL 600 emergency salary. </li><li><strong>2020 election.</strong> Supreme Court Justice Luís Roberto Barroso, who presides over the Superior Electoral Court, ruled that voters will not need to undergo biometric verification to vote in the 2020 municipal elections, scheduled for November. After listening to experts, he pondered that making voters touch a fingerprint reader would pose an additional health risk.</li><li><strong>Aviation.</strong> Congress approved a presidential provisional decree yesterday giving up to 12 months for airlines to reimburse customers who had their flights canceled due to the pandemic. Companies will also be able to offer passengers credit for future purchases — of the same value or more. Lawmakers pointed out that the <a href="">pandemic has reduced demand</a> for domestic flights by 93 percent — and 98 percent for international flights.</li><li><strong>Carnival 2021.</strong> The prolongation of the coronavirus crisis in Brazil means the 2021 Carnival may be affected by the pandemic, potentially being <a href="">canceled altogether</a>. Authorities in Rio de Janeiro and Salvador say street festivities scheduled for February 12-16 would only be feasible if a coronavirus vaccine were to be available by November of this year — which is unlikely. Carnival is a huge moneymaker: in Rio de Janeiro alone, the holiday attracted 2.1 million tourists this year and raised BRL 4 billion (USD 748 million).</li><li><strong>Police brutality.</strong> Amid a worldwide conversation about police brutality, the Brazilian Forum on Public Safety think tank published a study showing that, between January and June, the São Paulo police killed 442 people — the highest number for the period since data began being compiled in 2001. Researchers say the numbers prove that police brutality is more than a question of a &#8220;few rotten apples&#8221; within the force, as authorities have suggested.

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