Carlos Abadi, a Cornell alumnus

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Carlos Abadi, a Cornell alumnus, kicked off the first panel by offering a financial perspective regarding the crisis in the region. He briefly highlighted the macroeconomic landscape while pointing out encouraging signs in the Brazilian economy such as positive trends related to inflation expectations, which have substantially decreased since last year. This has already given way to a more accommodating monetary policy and is likely to stimulate consumption and investment. On the political front, after the impeachment, there has been a slight reduction in political uncertainty (albeit temporary). Finally, global growth is helping. The United States and Europe are on a growth path, even as China has slowed down.

Regarding the private sector, one of the largest impediments for further investments has been the outdated bankruptcy law. According to Abadi, the implementation of specialized judges for bankruptcy should change. He went on to explain how bankruptcies are analyzed by general commercial judges, none of whom has special bankruptcy expertise, he argued. Another obstacle he stressed is how bankruptcy “lasts forever” (with some companies being tied up in court for 5 years or more). Third, he brought up how in Brazil the difference between the nominal value of debt and its restructured value is taxed. If this tax was eliminated, he argued, it would speed up bankruptcy. Finally, for Abadi, legal protection is needed to allow investors to purchase distressed assets free of liability, without which the recovery of investments in Brazil would be delayed.

http://www.johnson.cornell.edu/Emerging-Markets-Institute/News-Events/EMI-Article-Detail/ArticleId/47086/Brazil-and-Latin-America-Innovating-to-Overcome-the-Crisis-1

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