Posts Tagged ‘Brazil’s economy’

Brazil’s unemployment rises to 12.6 percent

March 29, 2018


© AFP/File | Unemployed people read announcements of job offers in downtown Sao Paulo — the jobless rate in Brazil has now hit 12.6 percent

RIO DE JANEIRO (AFP) – Brazil’s jobless rate rose in the quarter through February, hitting a higher than expected 12.6 percent, the government statistics office said Thursday.The 0.4 percentage point increase on the previous quarter was the second consecutive rise. Analysts polled by the financial newspaper Valor had expected unemployment to reach 12.5 percent.

The December to February period saw 13.1 million people out of work, compared to 12.7 million in November through January.

The nudging up of joblessness follows what had been nine consecutive falls in the index, reflecting what center-right President Michel Temer says is Brazil’s steady exit from its deepest recession in history.

Thursday’s news could hurt Temer, who has toyed with running in October presidential elections, although he is already Brazil’s most unpopular leader on record, with approval ratings in the single digits.

However, compared year on year, Brazil’s jobs market is improving. During the same quarter a year ago, there were 426,000 more people unemployed.


China and Brazil sign agreements on football, nuclear power

September 1, 2017


© AFP | Brazilian President Michel Temer (R) has vigorously sought Chinese investment as seeks to revive Latin America’s largest economy

BEIJING (AFP) – China and Brazil signed 14 cooperative agreements on Friday, including on football and nuclear and hydro power, as embattled Brazilian President Michel Temer seeks to revive Latin America’s largest economy.They were inked following Temer’s meeting with President Xi Jinping in Beijing ahead of next week’s BRICS summit.

Temer, who has vigorously sought Chinese investment since taking office last August, said his 19-member delegation “shows the priority that we give” to relations with Beijing which he praised as “prosperous and affectionate”.

“Brazil is a premier cooperative partner for China,” Xi said.

“The Brazil-China relationship has global strategic significance and the two countries should deepen their cooperation and proceed ahead in harmony.”

China, meanwhile, is looking to find overseas markets for its excess industrial production capacity.

Aside from economic matters, Xi has stated he aims to make China a genuine force in international football and hopes to see it host the World Cup.

Brazil’s economy is slowly returning to growth after two years of recession, with the government statistics office revealing Thursday that the country’s jobless rate unexpectedly fell to 12.8 percent in the three months through July.

As the 76-year-old head of the centre-right PMDB party, Temer has pushed austerity cuts, looser labour laws and a big privatisation programme that he says will revive the sickly economy after more than a decade of leftist rule.

The president is also embroiled in a heap of corruption scandals, having been accused of everything from coup plotting to taking millions of dollars in bribes.

Zhang Run, the deputy director general of China’s department of Latin American and Caribbean Affairs, told reporters that Brazil’s economy was “back on track”, adding that their relationship had “withstood the test of changing circumstances”.

Trade between the two countries rose more than 30 percent in the first seven months of this year, Zhang said, noting that China’s more than $30 billion in investments in Brazil makes it the “number one destination for Chinese investment in Latin America”.

Zhang added that China recently became Brazil’s top export market for beef, despite a rotten meat scandal this June which threatened the country’s position as the world’s leading beef and poultry exporter.

Brazil: New Phase of ‘Car Wash’ Corruption Probe

August 23, 2017

RIO DE JANEIRO — Brazil’s federal police said on Wednesday they launched a new phase of the “Car Wash” corruption probe, targeting individuals who allegedly favored a private contractor to win business from state-run oil company Petroleo Brasileiro SA.

The police served four search warrants in two states and the federal district, a statement said. There was evidence that two individuals allegedly paid bribes to help an unnamed U.S.-based company obtain Petrobras contracts, police said.

Last week, Brazilian authorities carried out two new phases of “Car Wash,” ensnaring U.S. asphalt maker Sargeant Marine, six Greek shipping companies and a former Brazilian congressman in the wide-ranging graft probe.

The phase announced Wednesday targets two lawyers who allegedly participated in the scheme, and received commissions related to the hiring of an unnamed U.S. company, according to the statement.

It is not clear if the U.S. firm implicated last week is the same as the one this week, but the police said the latest operation extends the work of recent prior phases.

The police are holding a news conference at 10 a.m. local time (1300 GMT).

Separately, late Tuesday Brazil’s Supreme Court agreed to put former president and current Senator Fernando Collor on trial on corruption charges.

Collor allegedly took millions of dollars in bribes between 2010 and 2014 to help UTC Engenharia and other firms win contracts with BR Distribuidora SA, the fuel distribution unit of Petrobras, according to prosecutors.

Collor’s office did not immediately respond to a request for comment.

Collor is the second former Brazilian president to face trial on corruption charges. Earlier this month former leader Luiz Inacio Lula da Silva was found guilty on graft charges. He is free, pending an appeal.

(Reporting by Pedro Fonseca; Editing by W Simon and JS Benkoe)

Brazil’s Lost Decade: The Invisible Costs of an Epic Recession

August 22, 2017

Bloomberg News

By David Biller and Gabriel Shinohara

August 21, 2017, 6:01 AM EDT
Image result for Rio de Janeiro, photos
  • One in four young Brazilians is unemployed, govt data shows
  • Investment in education, health and R&D has plummeted

The rise in street beggars and decaying infrastructure are perhaps the most obvious symptoms of Brazil’s economic and political meltdown. But it’s the less visible fallout — like the cancellation of school lunches and the cuts to life-saving medical research — that may leave its most devastating legacy.

Years of belt-tightening following the end of the commodities boom have squeezed government funding of education, health, research and policing. Fewer cops on the beat have led to more crime and more deforestation of the Amazon — longstanding Brazilian problems that are back with a vengeance.

Job seekers view a list of employment openings outside the Ministry of Labor and Employment in Rio de Janeiro.

Photographer: Dado Galdieri/Bloomberg

The fallout from austerity is exacerbating near-universal contempt for the country’s political elite after three years of scandal and, in a phenomenon that mirrors a growing trend across the world, risks propelling outsiders into power in next year’s national elections.

“Recovering lost development will consume at least the entire term of the next president, in the best of cases,” said Carlos Langoni, a former central bank governor who’s director of the Center for World Economy at the Getulio Vargas Foundation in Rio de Janeiro. “Our big frustration as economists and Brazilians is that the country could already be on another level of development and social well-being, and we’re losing time.”

Once the emerging-market darling of Wall Street, Brazil’s economy went from growth of 7.5 percent in 2010 to shrink by virtually the same amount in the last two years. Unemployment has risen to a near-record high, GDP per capita fell to 2009 levels and the budget deficit is hovering around 10 percent of GDP. There is no sign the Latin American giant will recover its investment-grade status any time soon.

Recent setbacks have dispelled much of the hope that Brazilians nurtured for their country throughout the 2000s, when soaring prices for soybeans, coffee and sugar tripled exports and swelled government coffers. Former President Luiz Inacio Lula da Silva had been showered with international praise for beginning to remove some of the symbols of Brazil’s backwardness, from malnutrition to the destruction of vast swathes of the Amazon.

Millions of Brazilians rose out of poverty on Lula’s watch and began to enjoy the fruits of a middle class lifestyle. Today, the ladder up Brazil’s notoriously rigid socio-economic structure is inaccessible to most people.

Canceled Scholarship

Studying on an empty stomach, experts agree, will undermine scholastic aptitude and potentially diminish performance in the labor market. In the north-eastern state of Bahia, local officials blame the lack of school lunches on budget cuts by the federal government.

Students, teachers and supporters protest the budget cuts that have left many public institutions without classes.

Photographer: C.H. Gardiner/Getty Images

“This year the situation worsened,” said Rui Oliveira, head of the Bahian chapter of the association of teachers on leave. “In the hinterlands of the state, where the situation is more intense, it’s the only source of food for the children.”

Saullo Rosa, the 26-year-old son of functionally illiterate parents in a crime-ridden city near Rio de Janeiro, was going to be the first member of his family to graduate from college – until the state ran out of money to pay teachers and the school suspended operations.

In the nation’s capital, David Moyses was hoping to go to UCLA to complete his engineering studies with the help of a federal government scholarship. After doing the necessary exams, the program was scrapped, along with his dreams.

“I see others who went abroad getting jobs in the best companies, while I get the leftovers,” said Moyses, a trainee at the state-owned real estate developer Terracap, where he earns less than $300 per month.

For Brazilians aged 14 to 24, the job market is particularly bleak with more than one in four unemployed, according to the government-run think tank Ipea.

Read more: How Brazil lost its way — a QuickTake explainer

Hepatitis, Deforestation

To be sure, without budget cuts, Brazil’s public accounts would be in an even worse state and would delay restoration of investment-grade status. But austerity is beginning to hit some of the most promising Brazilian industries, such as the development of vaccines.

At the Fiocruz laboratory, management has told researchers that there isn’t enough federal money to keep up the 20-member team studying hepatitis, a disease that affects up to 2 million people in Brazil, according to the Brazilian Society of Infectious Diseases.

“A two- or three-month delay in payment to the teams and for the research can set back the study by a year,” said Manoel Barral Netto, vice-president of education at Fiocruz.

Elsewhere, there have been similar cuts. The federal budget for scientific research is a quarter of what it was in 2010, and part of what remains has been frozen, according to Ildeu de Castro Moreira, head of the Brazilian Society for the Progress of Science. “Other countries continue to invest in times of crisis,” he said. “Here we’re retreating.”

The national council promoting science and technology, or CNPq, is struggling to adapt to the new budget reality. José Ricardo de Santana, head of institutional cooperation, said the council is no longer “launching large, new programs.”

Deforested land of a rain forest is seen in this aerial photograph taken above Maraba, Brazil.

Photographer: Dado Galdieri/Bloomberg

World Wildlife Foundation partners have witnessed increased invasions by small-scale farmers and speculators of protected areas in the south of Amazonas state. Deforestation in the Amazon forest surged 29 percent last year, according to official estimates. “One of the main reasons is the reduction of the Environment Ministry’s spending, especially the budget directed to supervision,” said Mauricio Voivodic, the executive director at WWF Brazil.

The country’s staggering reversal of fortune is certain to dominate the 2018 vote to replace President Michel Temer. While few politicians will be willing to criticize Bolsa Familia, the popular cash-transfer program created by Lula, many will be quick to blame him and his successor and disciple Dilma Rousseff of driving public spending to unsustainable levels.

“Brazil needs to change, Brazil needs to modernize, Brazil needs to understand that if the private sector is given the right conditions, it will grow and create jobs,” said Rodrigo Maia, president of the lower house. “One shouldn’t think Bolsa Familia will resolve Brazil’s problems.”

— With assistance by Vanessa Dezem, Gabriel Shinohara, Luisa Marini, and Rachel Gamarski

S&P says won’t downgrade Brazil credit ratings — for now

August 16, 2017


© AFP/File | International credit rating agency Standard and Poors said Wednesday that it has decided not to downgrade Brazil’s sovereign ratings for the time being
PARIS (AFP) – International credit rating agency Standard and Poors said Wednesday that it has decided not to downgrade Brazil’s sovereign ratings for the time being, but may well do so next year if Latin America’s biggest economy does not sufficiently tackle its debt.

S&P Global Ratings said in a statement it had removed Brazil from its CreditWatch list, “where we had placed them with negative implications on May 22, 2017”.

Brazil’s long-term sovereign debt is currently rated “BB”, which is non-investment grade or “junk”, but S&P had placed it on a list for possible downgrade after president Michel Temer was nearly ousted in a corruption scandal.

Since then, however, “the political landscape is somewhat more settled as President Temer survived a vote — by the Federal Electoral Court (TSE) in June and by Congress in August — related to corruption charges,” the rating agency said.

“Meanwhile, the economy appears to have stabilized despite fluid politics, Congress passed a labour reform in July, and the government remains committed to advancing some pension reform,” it continued.

Nevertheless, S&P said it would keep the “negative” outlook on Brazil’s ratings.

That “reflects ongoing political challenges and the risk of a downgrade over the next six to nine months — given Brazil’s high and rising debt burden — should Congress fail to advance legislation that begins to reduce Brazil’s fiscal rigidities, which hinder deficit reduction and sustained moderation in spending growth,” it argued.

Brazil’s finance minister, Henrique Meirelles, said Tuesday that the government was raising its deficit ceiling for this year and 2018 because of a big drop in tax revenue, sluggish growth and other woes in Latin America’s biggest economy.

Brazil President Weakened by Graft Charge, Losing Fiscal Battle

August 12, 2017

Aug. 11, 2017, at 3:29 p.m.


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Brazil’s President Michel Temer reacts during a ceremony in Sao Paulo, Brazil August 8, 2017. REUTERS/Leonardo Benassatto REUTERS

By Anthony Boadle

BRASILIA (Reuters) – Brazilian President Michel Temer has burned through political capital fighting corruption charges and is struggling to push forward his economic agenda meant to rein in a gaping budget deficit.

Even allies in Congress now doubt he can achieve anything but watered-down measures, likely delaying any fix to Brazil’s fiscal crisis until the economy recovers from deep recession.

With continued deficits, Brazil risks further downgrades in its credit rating. It lost its investment grade two years ago, adding to the cost of financing mounting public debt.

In a sign of Temer’s failure to restore fiscal health, the government is expected to revise upward its 2017 and 2018 deficit targets on Monday due to falling tax revenues in an economy that is barely growing.

More pessimistic analysts worry the insolvency already faced by some Brazilian states that cannot pay employees or provide basic services will reach the federal government.

Temer had a window to pass a pension overhaul earlier this year, but it closed in May when allegations emerged that he condoned bribes in a taped conversation with the then CEO of the world’s largest meatpacker JBS S.A..”We are dancing samba at the edge of the precipice,” said Sao Paulo-based wealth manager Fabio Knijnik. “I don’t see the political class at all concerned with resolving this.”

The deeply unpopular president won enough backing in Congress on Aug. 2 to block a corruption charge that could have led to his suspension pending trial by the Supreme Court. To survive, he approved about $1.5 billion in pork barrel spending to keep lawmakers happy.

His closest ally in Congress, the center-right Democrats Party of Speaker Rodrigo Maia, does not believe Temer has the 308 votes, or three-fifths of the lower chamber, needed to pass pension reform, the key measure in his fiscal rescue plan.

Speaking in Rio on Friday, Maia said Temer’s political troubles and lower-than-expected tax revenues had created the crisis. He said Brazil had no alternative but to seek whatever pension fix it could, given Congress would not raise taxes.

Congressman Efraim Filho, the Democrats whip, told Reuters Temer must dilute the pension bill to get it past Congress. He said the measure had to be stripped down to its most important provision, a minimum age for retirement of 65 years for men and 63 for women in a country where people only work on average until age 54.


Temer’s government coalition is in disarray. Parties who stood by the president are now demanding they be rewarded with cabinet positions, such as the big-budget Cities Ministry. It is now controlled by the Brazilian Social Democracy Party (PSDB), which split over whether to abandon the scandal-plagued president.

Until they get their way, the allies at the core of his coalition have said they will not put his proposed pension bill to the vote. Maia said the “climate” was not right to move to a floor vote and the bill could languish and miss a legislative window likely to close in December as an election year approaches in 2018.

The government has already made concessions on the pension bill provisions that will reduce planned fiscal savings by up to 25 percent in 10 years and nearly 30 percent in 30 years, according to Finance Minister Henrique Meirelles.

The pension overhaul is vital for Brazil to comply with a 20-year spending cap that was Temer’s first move to restore fiscal discipline, albeit without a full impact on accounts until 2019.

“That ceiling was like saying you are going on a diet two years from now,” said Daniel Freifeld of Callaway Capital, a Washington D.C.-based investment firm.

(Reporting by Anthony Boadle; Editing by Andrew Hay)

Brazil Eyes Pension Vote, Budget Target After Temer Dodges Trial

August 3, 2017

BRASILIA — Brazil’s Congress is expected to reopen the door for a modest pension overhaul as soon as October, lawmakers said before returning to normal business on Thursday following a vote to block a corruption trial against President Michel Temer.

Still, legislators warned that Temer must spend some of his newfound political capital either on measures raising tax revenue or a new, less ambitious 2017 budget target. The choice could quickly put him at odds with allies and even erode market confidence in his austerity agenda.

President Michel Temer of Brazil in Brasília — Congress voted NO for a corruption trial.  Credit Eraldo Peres/Associated Press

Since May, uncertainty over whether Temer would be suspended from office and tried by the Supreme Court had paralysed talks on a proposed pension reform, the cornerstone of the president’s plan to eventual close Brazil’s gaping budget deficit.

The government, emboldened by a 263-227 vote to block the charges on Wednesday, now wants to resume talks with legislators by early next week, gauging support for the proposal, a government source told Reuters, requesting anonymity to freely discuss the government’s strategy.

Speaker Rodrigo Maia wants the lower house to vote on the reform by the end of August, he said earlier this week, which means the proposal could be approved by the Senate as soon as October, according to a second government source.

The government will not draw red lines in the negotiation, the first source added, in the hopes that lawmakers will agree to approve a meaningful overhaul now instead of resorting to piecemeal changes over the next few years.

Some remain sceptical that even a watered-down pension bill can pass, saying the window of opportunity for a pension reform may have closed ahead of next year’s general elections.

The risk of prosecutors pressing new charges against Temer could also darken the outlook.

Prosecutor General Rodrigo Janot charged Temer last month with taking bribes from meatpacker JBS SA which the president denies. Congress voted on Wednesday to block those charges from proceeding to the Supreme Court, but Janot may still bring additional charges in the case.

Wary of opening battles on several fronts, Temer is unlikely to move immediately on a plan to simplify the tax system.

The government prefers to wait a few weeks to test support for pension reform before deciding its strategy on tax reform, the second government source told Reuters.

Temer’s minister in charge of relations with Congress, Antonio Imbassahy, acknowledged that the pension reform faces a more challenging outlook than the tax overhaul, but said Temer would seek to approve both.


The government will also need a quick answer to growing questions about missing its annual budget target.

So far Temer has raised fuel taxes, frozen spending and stepped up asset sales to avoid changing the target – a decision that investors could read as a sign of weaker fiscal discipline.

This week Finance Minister Henrique Meirelles reiterated the government’s commitment to a 2017 fiscal deficit of 139 billion reais before interest payments.

The so-called primary deficit in the 12 months through June, however, rose to 167.2 billion reais, equivalent to 2.62 percent of gross domestic product and well above the official target.

Changing the target is a last-resort measure that could be announced later this month, the second government source told Reuters, adding that a new target would still not exceed last year’s 161 billion reais deficit.

More tax increases could face stiff resistance in Congress.

“It will not be prudent to change the target,” said Marcos Montes, whip of the government-allied Social Democratic Party (PSD) in the lower house. “But I don’t think society would stand even higher taxes. The government will have to cut even deeper.”

(Reporting by Silvio Cascione; Additional reporting by Ricardo Brito and Maria Carolina Marcello; Editing by Lisa Shumaker)

Brazil graft scandal puts ambitious economy reforms at risk

May 24, 2017


© AFP/File / by Jorge SVARTZMAN | People protest in front of the house of lower house speaker Rodrigo Maia, who would initially take over the presidency if President Michel Temer resigns or is impeached, in Rio de Janeiro, on May 21, 2017


Economic austerity reforms meant to put Brazil’s recession-damaged economy back on the rails are in danger now that President Michel Temer is on the verge of being ousted in a corruption scandal, analysts say.

Standard & Poors, the rating agency, reflected the concern on Tuesday by warning it could further lower Brazil’s credit rating due to political uncertainty.

“The economy will be very much affected by the crisis,” said Gesner Oliveira at GO Associados consultants. “It could be the third consecutive year of recession.”

For Temer — accused of corruption and obstruction of justice just as macro-economic signs are improving — last week was simultaneously the “best and worst moment” for his government.

Inflation is steadily dropping and growth is believed to be at the start of a modest recovery, even if unemployment remains dire at nearly 14 percent. After the economy contracted 7.2 percent in 2015-16, there are hopes for a renaissance.

Temer has pleaded for Congress to support him as calls for his impeachment grow. “We can’t throw so much work for the benefit of the country into the garbage bin,” he said.

He needs Congress to push through austerity reforms backed by economists but highly unpopular among ordinary Brazilians. Chief among them is raising the minimum retirement age to try to reduce the unaffordable state pensions bill.

But the scandal has triggered just the kind of economic instability he says he is working to eradicate, with the Sao Paulo stock market falling 8.8 percent last Thursday and the real dropping about eight percent against the dollar.

– Future without Temer –

Markets want the reforms to continue with or without Temer.

“Congress has to maintain continuity in the structural reforms that are fundamental for putting the country on the right path,” the influential National Confederation of Industry said in a statement on Tuesday. It made only one reference to Temer.

However, Geisner Oliveira says the mess means “right now there are no chances” Congress will approve the reforms.

Go Associados projects a possible 0.6 percent growth in Gross Domestic Product this year, with 150,000 new jobs, if the reforms go ahead. Interest rates now at 11.25 percent could fall to 8.5 percent.

But paralysis in Congress could cause GDP to shrink one percent instead, putting another 380,000 people out of work, with interest rates at 10 percent, the consultants said.

– Economy minister for president? –

The market’s preferred candidate to replace Temer in case of resignation or impeachment would be the economy minister, Henrique Meirelles, according to the financial daily Valor.

He heads the austerity push and was also head of the central bank during the two terms of leftist president Lula da Silva in 2003-2010, giving him broad credibility.

If pushed out, Temer — who has no vice president — would be replaced by a candidate chosen by Congress until after the next elections in October 2018.

Busy trying to reassure foreign investors, Meirelles told a conference in Sao Paulo on Tuesday that current economic policies would continue “regardless of anything else.”


Brazil Corruption Scandal Nears Temer, Roiling Markets and Prompting Impeachment Talks

May 18, 2017

Stock index down more than 10%; an opposition party calls for president’s resignation or impeachment

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President Michel Temer


May 18, 2017 1:40 p.m. ET

BRASÍLIA—An unfolding corruption scandal moved closer to President Michel Temer and a leading ally, sending financial markets plunging, prompting calls for Mr. Temer’s impeachment and potentially stalling an economic overhaul in Latin America’s biggest country.

The Ibovespa stock index was down 8% midday Thursday after declining as much as 10% earlier in the day, and the Brazilian real weakened to 3.32 against the dollar from 3.10…



Brazil President Rejects Calls to Quit Amid New Corruption Claims

Calls for Mr. Temer to step down multiplied on Thursday across Brazil’s political establishment, following a report by Globo, the country’s most powerful media group, of a secret recording in which the president had endorsed bribes paid to silence Eduardo Cunha, an imprisoned politician who was an orchestrator of Ms. Rousseff’s ouster.


Read the rest:

Brazil Crisis Deepens With Probe of President, Top Senator — Brazil shares fall 10% on Temer bribery claims — Obstruction of justice — Talk of impeachment

May 18, 2017

RIO DE JANEIRO — Brazilian federal police are searching the office and homes of a top senator and presidential contender.

Thursday’s searches of Sen. Aecio Neves’ home in Rio de Janeiro and his Brasilia office are fallout from a widespread corruption investigation that has also reached President Michel Temer.

Neves nearly won the presidency in 2014 and had planned to run in 2018. He is being investigated in several corruption cases related to the “Car Wash” probe into kickbacks to politicians. He has denied wrongdoing.

Late Wednesday, Globo newspaper reported that Neves was recorded asking JBS meat-packing company executive Joesley Batista for $700,000 to pay for his “Car Wash” defense.

Globo also reported that Temer was recorded by Batista endorsing the bribing of a former lawmaker to keep him quiet. Temer denies the allegation.

Image result for President temer, Brazil, photos


From FT (Financial Times)

By Andres Schipani in São Paulo and Joe Leahy in New York

Brazil’s markets crashed on their opening on Thursday, with the benchmark Ibovespa stock index down 10.47 per cent after one of the country’s leading newspapers alleged President Michel Temer had been taped endorsing bribe payments.

The real weakened 7.69 per cent against the dollar after the reports, which threaten to topple a government that had won market support with a set of crucial reforms to overhaul Brazil`s sinking public finances and rein in its over-generous pension system.

Brazil`s Treasury said it stood ready to ensure there was “adequate liquidity” in the markets and their “smooth functioning”. “We are now in the middle of the hurricane, there is a lot of uncertainty,” said Zeina Latif, chief economist at the São Paulo-based XP Investments.

The scandal threatens to plunge Mr Temer and his government, which was brought to power only last August with the removal by Congress of his leftist predecessor Dilma Rousseff, into another impeachment process.

O Globo reported that Joesley and Wesley Batista, respectively chairman and chief executive of Brazil’s largest meatpacker JBS, had presented a secret recording of Mr Temer approving bribes to Eduardo Cunha, the disgraced former speaker of the lower house, as part of plea bargain negotiations.

The report comes as the country’s political and corporate establishment is reeling from sprawling corruption investigations into state oil company Petrobras in a scandal known as Operação Lava Jato, or Operation Car Wash, which has implicated senior politicians, police, union bosses and indigenous leaders in a vast web of bribery.  According to the O Globo report, Mr Temer heard from Joesley Batista that JBS was paying Cunha to keep silent.

The president is alleged to have responded: “You’ve got to keep this up, OK?”  The report did not specify what Mr Cunha — who was crucial in the impeachment of former president Dilma Rousseff that brought Mr Temer to power last year — was alleged to have been asked to keep silent about.  The president’s office said in a statement that Mr Temer had “never asked for payments to obtain the silence of the former deputy Eduardo Cunha”.

Confirming the meeting with Joesley Batista at Mr Temer’s official residence, it added that “there was nothing in the dialogue that compromises the conduct of the president”. JBS declined to comment. Cunha, who is in jail, could not be reached for comment. FT Special Report Reinventing Brazil Brazil appears to be on the move again. After a rocky 2016, there are signs that the deep recession could be coming to an end.

Despite protests, the government is trying to cut back on spending and introduce changes that will ensure a more sustainable future.

The unverified report is already rattling the unpopular government. Protesters gathered on Wednesday night outside Brasilía’s modernist presidential palace and in São Paulo’s main thoroughfare honking horns and shouting “Temer, out!”

“If true, this is a bomb,” said Thomaz Favaro, political analyst at Control Risks, adding that if the recordings were confirmed, Mr Temer faced an investigation, public pressure to resign and impeachment proceedings in Congress.  “The development substantially increases the risk of an unscheduled government change before the 2018 election,” he said.

If Mr Temer left power, the next in line would be Rodrigo Maia, head of the lower house of Congress who is also implicated in the probes. Plea bargains in Brazil allow suspects to receive lighter sentences in exchange for giving evidence, which in the case of Operation Car Wash has led to investigation threads that have reached ever higher echelons of power.

The latest batch of plea bargains prompted the Supreme Court to open probes in April into many politicians, including eight government ministers. Mr Temer, already suffering from an approval rating of just 9 per cent, is battling to introduce an ambitious reform agenda including deeply unpopular changes to the pension system. Not only could the latest revelations trample on his plan — they could conceivably topple him.

Alessandro Molon, an opposition lawmaker, said he had filed an impeachment request against Mr Temer. Janaína Paschoal, a jurist and co-author of the impeachment request against Ms Rousseff, said on Wednesday night that if the recordings were confirmed, Mr Temer could not remain in office.

Columnist Igor Gielow wrote in Folha de São Paulo newspaper that while a mixture of luck and skill had allowed Mr Temer to get through the car wash investigations so far, “now he can at the very least be accused of a crime . . . obstruction of justice”.