New political scandals undermine Brazilian reform

Initial reaction had been that the new law had brought stability and predictability to a previously uncertain sector.

However, recent revelations about the country’s president, Michel Temer, allegedly offering to make certain financial payments have changed much.

“Everyone is apprehensive, [including] investors … when there is an earthquake of this magnitude in the political arena,” said port consultant Fabrízio Pierdomênico. “Politicians and investors need to separate this crisis as much as possible from the resumption of growth.”

He stressed that, irrespective of what is happening in government, the gains made in the new legislation have to continue. Nevertheless, he said that the ports sector is invariably impacted by political shocks.

Consultant Marcos Vendramini suggested that current political instability could cause delays to federal plans to auction off new port terminals, especially if President Temer is ousted.

“[Temer] is the person most interested in [driving through] a daring and dynamic concessions timetable,” he says.

Despite the problems, Mr Vendramini said that the legal certainty now guaranteed in the new ports legislation is key.

“The advantage to ports is, if the dollar rises, you export more; if the dollar falls, you import more. Either way, there is cargo.”