Posts Tagged ‘Brazilian Social Democracy Party’

Brazil President Weakened by Graft Charge, Losing Fiscal Battle

August 12, 2017

Aug. 11, 2017, at 3:29 p.m.

Reuters

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Brazil’s President Michel Temer reacts during a ceremony in Sao Paulo, Brazil August 8, 2017. REUTERS/Leonardo Benassatto REUTERS

By Anthony Boadle

BRASILIA (Reuters) – Brazilian President Michel Temer has burned through political capital fighting corruption charges and is struggling to push forward his economic agenda meant to rein in a gaping budget deficit.

Even allies in Congress now doubt he can achieve anything but watered-down measures, likely delaying any fix to Brazil’s fiscal crisis until the economy recovers from deep recession.

With continued deficits, Brazil risks further downgrades in its credit rating. It lost its investment grade two years ago, adding to the cost of financing mounting public debt.

In a sign of Temer’s failure to restore fiscal health, the government is expected to revise upward its 2017 and 2018 deficit targets on Monday due to falling tax revenues in an economy that is barely growing.

More pessimistic analysts worry the insolvency already faced by some Brazilian states that cannot pay employees or provide basic services will reach the federal government.

Temer had a window to pass a pension overhaul earlier this year, but it closed in May when allegations emerged that he condoned bribes in a taped conversation with the then CEO of the world’s largest meatpacker JBS S.A..”We are dancing samba at the edge of the precipice,” said Sao Paulo-based wealth manager Fabio Knijnik. “I don’t see the political class at all concerned with resolving this.”

The deeply unpopular president won enough backing in Congress on Aug. 2 to block a corruption charge that could have led to his suspension pending trial by the Supreme Court. To survive, he approved about $1.5 billion in pork barrel spending to keep lawmakers happy.

His closest ally in Congress, the center-right Democrats Party of Speaker Rodrigo Maia, does not believe Temer has the 308 votes, or three-fifths of the lower chamber, needed to pass pension reform, the key measure in his fiscal rescue plan.

Speaking in Rio on Friday, Maia said Temer’s political troubles and lower-than-expected tax revenues had created the crisis. He said Brazil had no alternative but to seek whatever pension fix it could, given Congress would not raise taxes.

Congressman Efraim Filho, the Democrats whip, told Reuters Temer must dilute the pension bill to get it past Congress. He said the measure had to be stripped down to its most important provision, a minimum age for retirement of 65 years for men and 63 for women in a country where people only work on average until age 54.

CRUMBLING COALITION

Temer’s government coalition is in disarray. Parties who stood by the president are now demanding they be rewarded with cabinet positions, such as the big-budget Cities Ministry. It is now controlled by the Brazilian Social Democracy Party (PSDB), which split over whether to abandon the scandal-plagued president.

Until they get their way, the allies at the core of his coalition have said they will not put his proposed pension bill to the vote. Maia said the “climate” was not right to move to a floor vote and the bill could languish and miss a legislative window likely to close in December as an election year approaches in 2018.

The government has already made concessions on the pension bill provisions that will reduce planned fiscal savings by up to 25 percent in 10 years and nearly 30 percent in 30 years, according to Finance Minister Henrique Meirelles.

The pension overhaul is vital for Brazil to comply with a 20-year spending cap that was Temer’s first move to restore fiscal discipline, albeit without a full impact on accounts until 2019.

“That ceiling was like saying you are going on a diet two years from now,” said Daniel Freifeld of Callaway Capital, a Washington D.C.-based investment firm.

(Reporting by Anthony Boadle; Editing by Andrew Hay)

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Brazil’s Temer Seen Likely to Defeat Corruption Charges in Congress

August 2, 2017

BRASILIA — The lower house of Brazil’s Congress began debating whether President Michel Temer should stand trial on a corruption charge for allegedly taking bribes, ahead of an unprecedented vote on Wednesday that he is expected to survive.

The deeply unpopular leader is trying to shake off a scandal that has paralyzed his administration, saying he wants to focus on passing legislation needed to end a budget crisis and help pull Latin America’s largest economy from its worst recession.

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President Michel Temer  (AP Photo/Eraldo Peres)

Opposition lawmakers chanted “Out with Temer!” on the House floor and walked in with briefcases stuffed with fake money.

Brazil’s top prosecutor Rodrigo Janot in June charged Temer with arranging to eventually receive a total of 38 million reais ($12.16 million) in bribes from the world’s largest meatpacker, JBS SA in return for political favors.

Temer and his legal team deny any wrongdoing.

The congressman responsible for recommending whether to proceed with the charge against Temer, Paulo Abi-Ackel, of the government-allied Brazilian Social Democracy Party, said the charge filed by Janot lacked proof.

He credited Temer with turning around Latin America’s largest economy, with inflation, interest rates and record unemployment falling, and incipient signs of renewed growth.

“Is this the right time to be removing the president?” Abi-Ackel said on the House floor, appealing to his peers to support Temer.

The president’s allies are confident his opponents would not muster the two-thirds of the full house vote needed to send the charge to the Supreme Court, where Temer could be put on trial.

According to Arko Advice, a Brasilia-based consulting firm, their survey of lawmakers shows Temer will win between 257 and 270 votes, enough to avoid trial, but less than the president’s supporters have said they need for a real show of strength.

TEST CASE

The lower house vote will gauge how much political capital Temer still has to block additional charges federal prosecutors are preparing to file against him and to advance a crucial overhaul of Brazil’s costly pension system.

Even some Temer opponents say it is unlikely the charge against him would advance on Wednesday.

“It is very hard to get 342 votes,” said Congressman Rubens Bueno of the Popular Socialist Party, which quit Temer’s coalition after the leader was caught up in the corruption investigation.

“What matters is how many votes he gets. If Temer does not have a comfortable majority, his government will become unstable,” Bueno told Reuters.

Temer has scrambled for support in recent days to avoid becoming the second president to be ousted in a year in a deepening crisis fueled by massive corruption investigations.

Temer’s hold on office could become precarious if new corruption charges are brought against him as expected. With the 2018 election year approaching, key lawmakers have told Reuters they would find it harder to back him again later his year.

Janot, has said he will file at least two more graft-related charges against Temer before he steps down in mid-September.

Janot is considering filing the charges of obstruction of justice and racketeering sooner if lawmakers reject the first corruption charge on Wednesday, an official with direct knowledge of the investigation told Reuters.

Janot’s team has to provide evidence linking Temer to a payment made by JBS to his right-hand man, Rodrigo Rocha Loures, who was arrested in June after a police video caught him rushing out of a Sao Paulo restaurant carrying a bag full of cash handed to him by a JBS executive.

Brazil has impeached two presidents, including Temer’s leftist predecessor Dilma Rousseff, whom he succeeded last year, in a move Rousseff called a ‘coup’ orchestrated by Temer and allies in an attempt to disrupt the corruption investigation.

But Temer would be the first to face trial for corruption if any charge against him is eventually approved.

($1 = 3.1240 reais)

(Additional reporting by Maria Carolina Marcello, Ricardo Brito and Lisandra Paraguassú; Editing by Paul Tait and Alistair Bell)

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