Is now a good time to invest in Brazil?


One year ago, Dilma Rousseff was Brazil’s president; Guido Mantega was finance minister; Eduardo Paes was Mayor of Rio and held majority support; Eduardo Cunha was speaker of the House; and Renan Calheiros chaired the Senate.
Today, Rousseff has been impeached;  Mr. Mantega arrested and investigated in connection with Operation Car Wash; the candidate backed by Mr. Paes as his successor lost the municipal election in Rio; Mr. Cunha was arrested for alleged corruption this week; and Mr. Calheiros is the next target for the Operation Car Wash investigations.
As seen by foreign observers, political instability has unarguably reached an alarming level in Brazil. Concerns that it could spill over into the economy are understandable. After all, how many more corporations and individuals may be singled out for investigation?
While this may make investors wary of Brazil, there are a few points that foreign observers should bear in mind:
There are still many excellent investment opportunities in Brazil, despite the political chaos.
There are plans to award concessions and to privatize sanitation services. Several companies are unable to access credit facilities and others have market presence but require restructuring. A number of attractively priced assets such as these are emerging in the local financial sector.
Operation Car Wash may attract uncertainty now, but will ultimately bring about needed structural reform.
Operation Car Wash and its offshoots have definitively become part of Brazil’s institutional process. Our country has to accept the negatives, address them, and move forward. The corrupt practices that we’ve seen in Operation Car Wash  trace all the way back to Brazil’s origins. This makes Operation Car Wash much more than a criminal investigation; it is an identity crisis for a Medusa-like country that could only look at its own face indirectly through mirrors or reflections for fear of being turned to stone. Operation Car Wash will be historic for Brazil because it makes the country examine the unspoken practices that have been endemic.