Written by Celso P. Santos exclusively for SouthFront
Brazil’s new interim president Michel Temer has addressed the nation after the Senate voted to back the impeachment trial of Dilma Rousseff.
Mr. Temer called for “Trust in the values of our people and in our ability to rebuild the economy”. He has named a business-friendly cabinet that includes respected former central bank chief Henrique Meirelles as finance minister.
Ms Rousseff denounced her removal as a “farce” and “sabotage”. Mr. Temer was the leftist vice-president of Ms Rousseff before withdrawing his party’s support in March. She has accused him of involvement in a “coup”.
After Wednesday’s all-night session that lasted more than 20 hours, senators voted with 55 votes to 22 to suspend Ms. Rousseff and put her on trial for budgetary violations.
In her final speech on Thursday afternoon, she again denied the allegations and vowed to fight what she called an “injustice” by all legal means.
Mr. Temer, has taken the post of a president for up to 180 days – the maximum time allowed for the impeachment trial of Ms. Rousseff. He said: “It is urgent to restore peace and unite Brazil. We must form a government that will save the nation.”
Temer: ‘Rebuilding credibility’
Stressing that “economic vitality” was his key task, he added: “It is essential to rebuild the credibility of the country at home and abroad in order to attract new investments and get the economy growing again.”
However, he said that Brazil was still a poor nation and that he would protect and expand social programs. “Let’s stop talking about the crisis. Let’s work instead.” Michel Temer also said that he would support the sweeping investigation for corruption at the state oil company Petrobras, which has embroiled many politicians and officials.
Mr. Temer has nominated 22 people for the cabinet. There are no women, although two more names are expected to be added to his list. Ms. Rousseff had suggested earlier that sexism in the male-dominated Congress had played a key part in the impeachment process.
Mr. Meirelles, the new finance minister, has built a reputation for calming nerves in the markets when heading the central bank, and helped tame inflation to create one of the country’s biggest economic booms.
However, analysts say that Mr. Temer’s popularity ratings are at least as bad as Ms. Rousseff’s and he will faces many challenges. During the overnight debate, Senator Jose Serra, who has been named the new foreign minister, said the impeachment process was “a bitter though necessary medicine”.
“Having the Rousseff government continue would have been a bigger tragedy,” he added.
Roussef: ‘Being sabotaged’
In her TV speech, flanked by ministers at the presidential palace, Ms. Rousseff said that she may have made mistakes but had committed no crimes, adding: “I did not violate budgetary laws.”
She said: “What is at stake is respect for the ballot box, the sovereign will of the Brazilian people and the Constitution.”
She is accused of having juggled public funds to make her government’s economic performance appear better than it was, in order to increase her chances of a second term. Branding the process as “fraudulent” and saying her government was “being sabotaged”, she vowed to fight the charges against her and said she was confident she would be found innocent.
Ms. Rousseff has denied any wrongdoing and said that the impeachment proceedings are tantamount to a coup d’etat. Her removal ends 13 years of leftist rule.
Economic recession
Brazil’s economy is in a very bad condition. It grew at 7.5% per annum only six years ago, but last year it contracted 3.8%. A similar number is expected this year. Inflation ran above 10% last year and more than 10 million people are currently unemployed, with many jobs having been lost in the past 12 months.
Mr. Temer’s answer to the crisis is not different from Ms. Rousseff’s in principle. He believes Brazil must bring down its level of public debt, which could amount to 80% of the country’s GDP three years from now, according to Moody’s credit rating agency.
A lower debt ratio would mean that consumers and investors are regaining confidence in Brazil’s ability to pay off its debts without having to print more money (which would push inflation even higher). The key to achieving that is by cutting spending, as there is no political support for raising taxes. Ms. Rousseff had committed to achieving a budget surplus in 2015 and 2016, but failed to deliver on that promise – which got Brazil downgraded to junk by the credit rating agencies.
Henrique Meirelles, the man Mr. Temer has chosen to become finance minister, says that Brazil must set realistic budget targets and effectively meet them to regain consumer and investor confidence.
To be successful, they will need to work with the country’s Congress members, whose opinions seem very volatile at the moment.
Social policies at risk
The Workers’ Party implemented a host of social programs that have benefited the poor – schemes that promote better housing, minimum income, technical education and access to universities.
In times of budget cuts, Mr. Temer says the scope and effectiveness of all these social programs will have to be reviewed. Even for a popular president, those would be tough decisions to make. In the case of Mr. Temer, who was not directly elected to office, this task is likely to be even harder.
Ricardo Paes de Barros is a chief economist at the Instituto Ayrton Senna charity and professor at Insper Business School, and has close links with the people who will run Mr. Temer’s social policies. He says programs must be carefully reviewed, but spending should not go down.
“In general the government budget should be countercyclical, so you should have higher social spending when you are in a crisis. When the economy is booming you should have lower social expenditures,” he told the BBC.
