Brazil’s Unpromising New Year

Paulo Sotero – The Huffington Post, 12/28/2015

A president fighting impeachment names a finance minister not trusted by markets as Brazilians, dismayed by the country’s politics, prepare for more hardship in 2016.

The debilitating political and economic crisis that engulfed Brazil in 2015 is bound to continue, regardless of the outcome of the opposition effort to impeach a discredited President Dilma Rousseff. The impeachment process started in early December is expected to drag on for months. Procedural wins by the president at the Supreme Court before Christmas dissipated a sense of inevitability of her removal from office, but did not improve her chances of regaining credibility to govern in the three years remaining in her second term. The political battle that paralyzed the congressional agenda in 2015 will deepen, undermining efforts to address the growing fiscal and structural problems that turned Brazil from a once promising emerging economy into an economic disaster in the first year of Rousseff’s second term.

The negative outlook was reinforced as the year ended by the departure of Finance minister Joaquim Levy, a fiscal conservative Rousseff named after her narrow reelection in October 2014 to rebalance the nation’s fiscal accounts and restore investors’ confidence. “It looks like the government is afraid of the reforms,” a frustrated Levy said in an exit interview.

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