SAO PAULO – The chief executive officer of the Brazilian unit of Spain’s Banco Santander said on Wednesday he was concerned the winner of this year’s presidential election in the South American country would not be committed to a fiscal stability agenda.
“It’s a scenario that worries me. It’s a scenario in which you once again have a marked economic slowdown, with all its implications,” Sergio Rial said in a meeting with reporters to discuss Banco Santander Brasil’s 2017 results, including record net income of 9.9 billion reais (more than $3.1 billion), up 35.6 percent from 2016.
Failing to continue the current “fiscal stability agenda” would be national suicide, he added.
“What happens if after the elections we clearly see a non-reformist government, if the pension reform doesn’t go forward? The scenario that could happen is precisely (a return) to what we’re coming out of,” Rial said.
The CEO was referring to Brazil’s deep recession of 2015 and 2016, when its gross domestic product plunged more than 7 percent.
The political picture heading into October’s election is heavily clouded because the frontrunner, former President Luiz Inacio Lula da Silva, who governed Brazil from 2003 to 2010, may be barred from running after an appeals court last week upheld his earlier corruption and money-laundering conviction and increased his prison sentence from nine and a half years to 12 years and one month.
Electoral authorities will have the final say on his candidacy.
Lula, who accepted his Workers’ Party’s presidential nomination last week despite his legal woes (he also faces several other corruption indictments), is currently free while further appealing his conviction for allegedly accepting a penthouse apartment from engineering firm OAS in exchange for helping that company secure contracts with Brazilian state oil company Petrobras.
Lula has vowed to roll back the market-friendly reforms enacted by current President Michel Temer.
Since taking office in 2016, Temer has carried out an austerity drive aimed at getting Brazil’s financial house in order, including successfully pushing for a spending cap that limits public spending to inflation for the next 20 years.
On Wednesday, the nation’s central bank said Brazil’s public sector posted a primary budget deficit (excluding interest payments) last year of 110.6 billion reais, well under the maximum target for 2017 of 163.1 billion reais and down from a record high of 155.8 billion reais in 2016.
Based on initial calculations, Brazil’s economy expanded by around 1 percent last year; private-sector economists and the government are forecasting growth of around 1.8 percent in 2018.