Brazil mint could be next|
November 28, 2017
Belgium, Denmark and the Netherlands have recently privatized their government-owned mints. It now appears Brazil could be next.
Brazil has been going through some tough financial times. Former Brazilian President Dilma Roussef was elected to that office in 2011 and impeached in 2016. Roussef has been accused of being involved in the Petrobras kickbacks and corruption scandal. Calls for her impeachment began when allegations of graft surfaced from when she was on the Petrobras board of directors between 2003 and 2010. She was actually found guilty of breaking budget laws but not for involvement in the Petrobras scandal.
Brazil spun into an economic crisis in late 2014. The following year Gross Domestic Product fell by 3.9 percent as salaries dropped, credit was restricted and interest rates rose. The GDP fell an additional 3.6 percent during 2016. During 2015 inflation reached 10.67 percent. The 2016 Rio Summer Olympic Games held in Rio de Janeiro went 51 percent over budget, adding $36 million to the nation’s debt. There was a Zika epidemic. Then the political crisis surrounding Rousset made the situation worse.
Michael Temer succeeded Rousset as president. Since coming to power Temer has embarked in a program in which he plans to sell off 57 state assets in an effort to regain control of the nation’s finances. Among the items considered for sale is Brazil’s stake in Electrobras, port terminals, energy transmission lines, highways, Congonhas airport in Sao Paulo, government-owned land coveted by mining companies and the national lottery.
What the Aug. 30 issue of Bloomberg Politics called the “King’s Mint,” the 323-year-old Casa da Moeda, is also on the sell list. If everything sells for the prices being asked, Brazil could raise the much needed US$14 billion.
The suggestion that the national mint is for sale appears to have hit a nerve. On Aug. 26, former Brazil President Luiz Inacio Lula da Silva said, “They’re trying to sell the mint, but the currency is a country’s heritage ... What woman would marry a man who, instead of looking for a job, says he’ll sell the fridge, bed, oven and TV? That’s what they’re doing!”
Roni da Silva is the vice president of the Sindicato Nacional dos Moedeiros union at the mint. Silva voiced he is concerned with future security for what the mint produces.
Union member Aluizio Junior added, “The Mint plays a strategic role in the defense of national sovereignty. It is a high risk for society to have the data of all Brazilian citizens available for a private initiative.”
The government has countered that the nation is moving towards a cashless economy and for that reason won’t need the mint. The mint also prints Brazil’s bank notes, medals, passports and revenue stamps. Passport production recently ceased, possibly for political reasons, according to Silva and others.
Casa da Moeda has been profitable for the past 13 years. Many of the other assets to be sold by the government are not. The mint is expensive to run. It employs dentists, doctors, a massage therapist, nutritionist, and about 2,700 additional employees. During 2016 the central bank imported some of Brazil’s coinage for 20 percent less than it cost for the mint to strike the same coins. An investigation began in June into possible fraud in a mint contract. It has been estimated 70 million reais (about $22 million US) in bribes could be involved.
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