The Week Ahead in Brazil #56

Short term trends

1. Politics – The Senate’s Parliamentary Inquiry Committee to investigate the Covid-19 response in Brazil (Covid CPI) initiated the hearings of former ministers of health, with the testimonies of Luiz Mandetta and Nelson Teich. Eduardo Pazuello asked for a postponement due to having contact with Covid-19 infected people. On Thursday (6), the current Minister of Health, Marcelo Queiroga, made his statement. For this week, the Covid CPI will hear the testimonies of the director-president of the Brazilian Health Surveillance Agency (Anvisa), Antonio Barra Torres, the former Secretary of Communications of Brazil, Fábio Wajngarten, and the president of Pfizer in Brazil, Marta Díez. The CPI has already sent 555 letters.

Throughout the week, President Jair Bolsonaro made several statements: he suggested that the CPI should investigate the son of Senator Renan Calheiros (MDB-AL), who is governor of Alagoas, and made harsh remarks about the CP’s works, the Supreme Court (STF), the Brazilian electoral system and China. Rodrigo Pacheco (DEM-MG), the Senate president, invited China’s ambassador to Brazil, Yang Wanming, to visit the Senate, and parliamentarians criticised Bolsonaro’s speech.

In the Senate, the Environment Commission (CMA) will hold a public hearing, on Monday (10), to debate PL 510/2021, which intends to expand the possibilities of landholding regularisation in Union lands.

At the House of Representatives, the Constitution and Justice Commission (CCJ) rejected PL 4754/2016 by 33 votes to 32. The bill proposal would expand the types of crimes of responsibility of ministers of the Federal Supreme Court (STF). Next week, the administrative reform (PEC 32/2020) will be debated in two committees. The Commission of Constitution and Justice and Citizenship (CCJ) will hold a debate on Monday (10), and the Commission of Labour, Administration and Public Service (CTASP) will have the other on Monday (10) and Tuesday (11). Also, on the same day, in different committees, the XX Brazilian Seminar on Road Cargo Transport and a hearing about the 5G technology in Brazil will be held.

Former President Luiz Inácio Lula da Silva (PT) spent the week in Brasilia, where he held several meetings with politicians.

2.Economy – The speaker of the Lower House, Arthur Lira (PP-AL), announced that the Joint Committee on Tax Reform should be terminated for exceeding the deadline for completion of work, invalidating the report presented by deputy Aguinaldo Ribeiro (PP-PB). Senate’s President Rodrigo Pacheco (DEM-MG) reacted and said he intends to maintain the report.

The Brazilian Central Bank’s Monetary Policy Council (Copom) raised the Selic rate from 2.75% to 3.50% and signalled it might increase the Selic rate by another 0.75 percentage points at its next meeting.

The trade results for April reached a monthly surplus of US$10.35bn, the highest ever recorded. The Brazilian real continues to strengthen against the dollar.

3.Public administration – In his testimony to the Covid CPI, Mandetta said that the discontinuity of the technical team ahead of the Ministry of Health contributed to the worsening of the pandemic. Teich said he realised he had no autonomy or leadership to continue as minister.

The General Advocacy of the Union (AGU) presented an appeal against the decision of the Federal Supreme Court (STF) that determined the federal government to carry out the 2021 Brazilian Census. The government argues that the 2021 Federal Budget was approved by Congress without sufficient resources to carry out the survey.

How to read it?

1. The political situation continues on a negative trajectory. Although the presidential coalition is showing signs of fatigue, it can still be considered functionally robust. The level of institutional conflict has increased, but popular support remains stable.

The Covid CPI continues to have a decisive influence on politics, damaging to the government’s image and creating fissures both in the House and Senate. The week starts politically worse for the government, and the upcoming depositions will reinforce this unfavourable scenario. Issues such as the tax reform and the failed impeachment project in the CCJ exemplify this trend. The government has support to prevent the advancement of projects against its interests, but finds it more difficult to approve its core agenda, as is the case of structuring projects and reforms.

The level of institutional conflict increased significantly week to week. With the beginning of the CPI, Bolsonaro released random attacks, in order to divert attention from the testimonies of former ministers, but the strategy generated little effect. Cutting through the noise, the STF did not issue an institutional response, Calheiros became more irritated and parliamentarians came out in defence of China as a crucial and strategic partner in many aspects.

2. The economy remains on a positive trend, showing signs of resilience. Monetary policy has conferred stability and predictability to economic agents, especially with the indications of adjustments in the Selic rate. Foreign trade results continue to surprise positively, as does the appreciation of the Real against the dollar.

3. Public management continues in a neutral trend. There were no significant changes regarding leadership, nor about the public policy-making process.

Mandetta attributed to Bolsonaro the responsibility for the progress of the disease in Brazil. As for Teich, he decided to resign upon realising he would have little autonomy in conducting the ministry, associated with Bolsonaro’s insistence on defending the use of chloroquine. The former ministers of health explained that Bolsonaro, besides ignoring the “diagnosis” stage in the public policy cycle, also advocated for solutions without technical and scientific support and continued to participate or promote agglomerations, which often happened without the use of masks. The CPI may be an excellent opportunity to improve public management.

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