President Lula returned to power determined to consolidate his legacy of social progress and reforms in Brazil, buoyed by a pro-democracy majority. From the start, however, he has faced obstacles: he inherited a compromised fiscal position, made worse by a post-election commitment to expand expenditures in 2023 bargained with the departing legislature in the waning days of the Bolsonaro administration. The market is uncertain of his adherence to transparent and prudent fiscal management and is concerned about the return of subsidized lending through state-owned banks. Moreover, his accent to power coincides with the downswing of the economic cycle. Likely, he will face a slowdown in growth and rising unemployment in 2024.

Against this backdrop, two initiatives could help turn the tide of expectation. Together with agribusiness, the petroleum and gas industry is thriving and expanding. And the turn toward greener energy will reinforce this momentum. On the policy front, the all-important tax reform is mature, largely consensual on its outline, and steadfastly supported by the new administration. Bernard Appy, one of the main proponents of the reform, has assumed a senior position in the Ministry of Finance as its chief negotiator. The aim is the have the legislation enacted in 2023.

The Chamber brought together Managing Director for Capital Markets, Sustainable Finances and Investor Relations Natalia Dias, Special Secretary Bernard Appy, and senior representatives and experts from the oil and gas, renewables, legal, and financial sectors to discuss these challenges, outline proposals, and share their views on Brazil’s prospects.