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  HOME | Brazil (Click here for more)

Brazil’s Temer Says Corruption Scandals Won’t Hinder His Reform Agenda

BRASILIA – Brazil’s President Michel Temer told EFE in an interview that a crisis stemming from major corruption scandals would not disrupt his reform agenda.

Temer said the measures his government had set up were aimed at lifting Brazil out of its current deep recession.

“I don’t believe that,” said Temer, who gave a detailed run-down of the reforms that have already been approved, including one establishing a public-spending ceiling over the next two decades, and those still in the legislative pipeline.

Among the latter, he underscored the “fundamental” importance of one that would ease strong worker protections under current labor law and another that would establish a minimum age for retirement.

Brazilians currently are eligible for retirement based on the number of years they had contributed toward a pension.

“Little by little, we’re convincing Brazilian society of the importance of this,” said Temer, who nevertheless acknowledged that the reforms he was pursuing were not translating into higher approval ratings.

Currently, only around 10 percent of Brazilians approve of his job performance, polls suggested.

Temer said those low ratings were the consequence of not pursuing a populist agenda, which he said was “irresponsible because it produces good results tomorrow but a disaster the day after tomorrow, which is what happened in the past,” in clear allusion to the administration of his center-left predecessor, Dilma Rousseff.

Rousseff was ousted from office in August through an impeachment trial for budget management irregularities; Temer, who had served as her vice president, took power with the country “in a deep recession” and “massive unemployment,” he told EFE in an exclusive interview.

The president said a distinction should be drawn between populist policies and those that are beneficial to people even though their fruits are not immediately recognizable.

Temer, who became acting president after the Senate voted in May to launch an impeachment trial against Rousseff, said the economy had already begun to respond in his first 11 months in office.

He said the unemployment currently affecting around 13 million Brazilians was starting to decline, although he acknowledged that the pace of the reduction was very slow.

The head of state stressed the importance of the planned pension overhaul for “salvaging” a system that was facing collapse with an accumulated multi-billion-dollar deficit and also for what it would represent in terms of confidence.

Temer said that partly thanks to the impact of his reform agenda, inflation had fallen from 10.67 percent in 2015 to 6.29 percent in 2016 and looked set to end this year at around 4 percent.

The president also said interest rates were “coming down significantly” and had fallen from 14.25 percent just over a year ago to almost single digits.

He added that those lower borrowing costs would be crucial in recovering the pace of investment, which also would be strengthened by privatization programs and the awarding of concessions to the private sector.

Other indicators that Temer said reflect improved confidence were the country risk rate, which has fallen in recent months from 575 basis points to 280, and an improved assessment of Brazil’s sovereign bonds by credit ratings agencies like Moody’s.

He said large Brazilian companies such as state oil company Petrobras, which was at the center of a massive corruption case that had led to investigations of more than 100 politicians and executives of large engineering and construction companies, also were enjoying credit rating upgrades.

“Petrobras became almost a taboo, or even an ugly, word,” but now the company had recovered its market value and the credit rating agencies had upgraded its rating, Temer said, adding that since the end of last year he had welcomed dozens of investors “willing to bet on Brazil.”

Among the investment inflows he was counting on were those from Spain, the second largest foreign direct investor in Brazil after the United States.

The prime minister of that Iberian nation, Mariano Rajoy, is set to be received by Temer on Monday.

 

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