Brazil's Interim President Analysis
Brazil’s Interim President Takes Over
Vice President Temer took office as Brazil’s interim president on May 12th. The many challenges to his presidency, and the need to respond swiftly to them, confronted him from day one.
First and foremost there is the fiscal ordeal. An escalating public indebtedness is destabilizing expectations, depressing investment spending and deepening the GDP downturn (Chart I). Temer’s first move in this front was well executed: he appointed the strongest economic team in over a decade to help him. Henrique Meirelles, the former Wall Street banker who helped to prop up the credibility of President Lula’s administration when he accepted the job of central bank governor, is the new Finance Minister. Ilan Goldfajn, one of the designers of Brazil’s inflation targeting system in the late 1990’s, will take the helm at the central bank. Other strategic positions, such as the national development bank (BNDES) or the embattled state oil & gas company Petrobras, are being filled by well-trained, high-caliber executives.
The first task of the new economic team was to produce an accurate estimate of the public sector borrowing requirements. President Rousseff is facing …show more content…
There is another one, also critical, but to which he has been merely reacting to: the developments in the political scenario owing to the Petrobras graft probe and other inquiries carried by investigative bodies. The need to secure a broad coalition to finalize Rousseff’s impeachment (its last stage is a trial in the Senate, where a two-thirds majority is required for conviction) pressed Temer to accept the support of a motley crew of politicians. His strategy to mitigate risks, however, has been brutally pragmatic: zero tolerance towards alleged misbehavior once accusations surface. Against this backdrop, two ministers have already resigned when caught on wiretaps in improper discussions on how to dodge or undermine the
Vice President Temer took office as Brazil’s interim president on May 12th. The many challenges to his presidency, and the need to respond swiftly to them, confronted him from day one.
First and foremost there is the fiscal ordeal. An escalating public indebtedness is destabilizing expectations, depressing investment spending and deepening the GDP downturn (Chart I). Temer’s first move in this front was well executed: he appointed the strongest economic team in over a decade to help him. Henrique Meirelles, the former Wall Street banker who helped to prop up the credibility of President Lula’s administration when he accepted the job of central bank governor, is the new Finance Minister. Ilan Goldfajn, one of the designers of Brazil’s inflation targeting system in the late 1990’s, will take the helm at the central bank. Other strategic positions, such as the national development bank (BNDES) or the embattled state oil & gas company Petrobras, are being filled by well-trained, high-caliber executives.
The first task of the new economic team was to produce an accurate estimate of the public sector borrowing requirements. President Rousseff is facing …show more content…
There is another one, also critical, but to which he has been merely reacting to: the developments in the political scenario owing to the Petrobras graft probe and other inquiries carried by investigative bodies. The need to secure a broad coalition to finalize Rousseff’s impeachment (its last stage is a trial in the Senate, where a two-thirds majority is required for conviction) pressed Temer to accept the support of a motley crew of politicians. His strategy to mitigate risks, however, has been brutally pragmatic: zero tolerance towards alleged misbehavior once accusations surface. Against this backdrop, two ministers have already resigned when caught on wiretaps in improper discussions on how to dodge or undermine the