Desperate times, desperate moves

The Economist, 9/5/2015

When a president has single-figure approval ratings, faces calls for her impeachment, and has lost control of her political base, is she in a position to play hardball with the country’s legislators? Brazilians will soon find out.

On August 31st Dilma Rousseff, their president, sent Congress a budget for 2016 with a gaping primary deficit (before interest payments) of 30.5 billion reais ($8 billion), or 0.5% of GDP, challenging its members to close the gap. It was a break with the sound-money practices that have underpinned Brazil’s economy. It was, some critics say, illegal. Certainly nothing similar has happened since at least 2000, when Fernando Henrique Cardoso, then the president, transformed public finances.

On a charitable view, Ms Rousseff was shocking legislators into making hard decisions rather than simply blocking her fiscal proposals. A harsher reading is that she does not know how to lead Brazil out of recession. The markets took that view. The day after the budget bombshell, the Ibovespa stock index fell over 2% and the currency closed at 3.7 per dollar, its lowest since December 2002.  On September 2nd, the central bank held steady a key interest rate it had been raising since last year.

Read more…

The Man Behind Brazil’s Economic Boom: Former President Cardoso

PBS News Hour, 7/30/2012

After the military dictatorship fell in the 1980s, Fernando Henrique Cardoso led efforts to combat high inflation and build Brazil’s economy into one of the fastest growing in the world. Jeffrey Brown talks to former Brazilian president Cardoso about his presidency and scholarship.

Watch video here…