AS SHE hobnobs with the other G20 heads of state in Brisbane this weekend, Dilma Rousseff, re-elected last month to a second four-year term as Brazil’s president, will have precious little besides her (narrow) victory to boast about. Every day seems to bring more evidence of just how big a mess she has left herself. Official data released in the past three weeks have shown a bulging budget deficit, falling industrial production and rising poverty. Even the job market, until recently a rare bright spot, with unemployment near historic lows of around 5%, is beginning to falter. This week payroll numbers showed a net loss of 30,000 jobs in October, the worst result for the month since 1999 and well below the average market expectations of a gain of 56,000.
Days before a kerfuffle broke out over a bill sent to Congress that would let Ms Rousseff in effect turn a primary fiscal surplus (before interest payments) of 1.9% of GDP promised in the 2014 budget into a deficit. Since the primary balance showed a hole equal to 0.5% of GDP in the nine months to September (because of a pre-election spending splurge), the government was merely facing up to reality. The opposition leapt on the opportunity to bash Ms Rousseff for fiscal incontinence and obfuscation. Some threatened contest this budgetary meddling before the Supreme Court.
If that weren’t enough, on...Continue reading
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