The Week Ahead in Brazil #96

What is happening in Brazil?

1. Politics – The former governor of São Paulo Geraldo Alckmin signed, on Wednesday, 23, his affiliation to the PSB (Brazilian Socialist Party) and opened the way to run as vice-president for the presidency of the former president Luiz Inácio Lula da Silva (PT). (Estadão)

The Minister of Infrastructure, Tarcisio de Freitas, confirmed that he will join the Republicanos, on Monday (28), to run for governor of Sao Paulo. With his entry into the party, and also the entry of the Minister of Family, Women and Human Rights, Damares Alves, the Republicanos should formally support Bolsonaro. (Valor)

President Jair Bolsonaro (PL) launched his campaign to reelection this Sunday (27) in Brasília. (O Globo)

Reports have revealed the possible existence of a parallel cabinet in the Ministry of Education. In a recording, the Minister of Education, Milton Ribeiro, said he prioritizes serving friends of evangelical pastors Gilmar Santos and Arilton Moura, at the request of President Jair Bolsonaro (PL). At least ten mayors reported that the pastors, both with no official link to the public administration, promised to release funds for municipalities through cash payments and purchase of Bibles. Parliamentarians of the Centrão and the evangelical caucus press for the departure of the minister. Ribeiro must appear on Thursday (31), in the Senate Education Committee to provide clarification on the matter. (Folha)

On Thursday (24), Justice Carmen Lúcia, of the Supreme Court (STF), authorized the opening of an investigation against the Minister of Education, Milton Ribeiro, to investigate these suspicions. She responded to a request from the attorney general, Augusto Aras, but asked the attorney general about the need for President Jair Bolsonaro to also be investigated. (Valor)

Senate President Rodrigo Pacheco (PSD-MG) is seeking support from leaders to build an agreement that allows the vote on tax reform in the first week of April when a new “concentrated effort” will be held – a period when parliamentarians seek to clear the agenda of appointing authorities. The proposed amendment to the Constitution (PEC 110/2019) is under discussion in the Constitution and Justice Commission (CCJ) of the Federal Senate. (Valor)

The Ipespe Survey on the evaluation of the Bolsonaro government shows that 54% (+2 percentage points) consider the government as bad or terrible and 26% (-1pp) as great or good. The disapproval rate was 65% against 31% approval.

According to the Ideia/Exame poll, 45% consider the government bad or terrible (-5pp) and 28% as great or good (+3pp), and the government is disapproved by 44% (-6pp) and approved by 32% (+3pp).

Three electoral polls were released this week. The Datafolha poll was conducted face-to-face with 2,556 respondents between 22 and 23 March and shows former President Luiz Inácio Lula da Silva (PT) with 43% of voting intentions. President Jair Bolsonaro (PL) has 26%.

The Ideia/Exame survey, conducted by telephone with 1,500 people interviewed between 18 and 23 March, shows Lula with 40% and Bolsonaro with 29%. Lula appears with 2pp less, and Bolsonaro with 2pp more in relation to the Ideia/Exame poll of February.

Finally, the Ipespe survey, conducted between 21 and 23 March, by telephone with 1,500 people interviewed, shows Lula with 44%, 1pp more than the previous survey, and Bolsonaro with 26%, 2pp less.

Here is a compilation of the electoral polls:

2. Economy – The president of the Central Bank, Roberto Campos Neto, said that the peak of inflation in 12 months will occur in April this year. (Estadão).

The Broad National Consumer Price Index 15 (IPCA-15), the official inflation indicator, stood at 0.95% in March, 0.04 percentage points below the February rate (0.99%). It is the highest variation for the month of March since 2015 (1.24%). (Infomoney)

The dollar retreated for the eighth straight trading session against the real and reached the lowest level in two years. The US currency closed, on Friday (25), around R$ 4.77, the lowest value since March 2020. Market analysts attribute the fall to at least two factors: trade surplus and a high basic interest rate (Selic). (Valor)

The Ministry of Economy announced on Monday (21) a permanent reduction of 10% in import tariffs of capital goods and computer science. Moreover, the ministry reduced to 0% until the end of the year the import taxes on seven products: coffee, margarine, cheese, pasta, sugar and soy oil. The import tax on ethanol, which is mixed with gasoline and also sold separately, was also zeroed. (Valor)

The Minister of Economy, Paulo Guedes, said yesterday that the government will extend the reduction of the Tax on Industrialized Products (IPI) to 33%. In an event of the Brazilian Association of Real Estate Companies (Abrainc), in São Paulo, Guedes said that the tax reduction that has been made will allow reindustrializing the country. (Valor)

The Brazilian Central Bank has decided to maintain its projection of a 1% rise for Brazil’s Gross Domestic Product (GDP) in 2022, according to the quarterly Inflation Report (IR) released on Thursday (23). The Central Bank also revised projections for Brazil’s external accounts in 2022, with current transactions going from a deficit of US$ 21 billion to a surplus of US$ 5 billion and the trade balance going from a positive balance of US$ 52 billion to US$ 83 billion. (Valor)

3. Public management – Brazil abstained on Wednesday (23) in a vote for the International Labor Organization (ILO) to punish Russia for the invasion of Ukraine, amid a rift on the international scene over ways to increase the diplomatic isolation of Vladimir Putin’s regime. (Valor)

The accusations and investigations on the influence of pastors in the Ministry of Education should occupy the agenda of the dome of the folder in the coming days.

An analysis:

1. Politics continues with a positive trend for the coming week. The level of institutional conflict is low, the president’s parliamentary support base continues to improve, the levels of popular support remain stable and the results of the electoral poll did not bring any surprises.

The government’s parliamentary support base continues to grow, mainly by the migration of lawmakers to the PL, PP and Republicanos. The important point is that the PL looks like it will end up as the largest party in the Chamber of Deputies after the window period. Bruno Carazza did some pretty interesting stuff on Twitter about the party moves so far. Not only that, but Bolsonaro also seems to have managed to transfer important cadres to the Republicans and thus keep the evangelical caucus satisfied. With the alignment of part of the MDB and a large majority of the PP, it is clear that the government will have a solid majority in the House from April until the end of the year, or at least until the elections if Bolsonaro is not re-elected.

A good test for the policy will be the public hearing of the Education Minister in the Senate. It is worth following closely and seeing how parliamentarians will act in the minister’s defence.

2. The economy continues with a positive trend for the coming week. The IPCA-15 data did not come in well. A lower result was expected. Nevertheless, the dollar continues to fall, which may contribute to controlling inflation. Another factor that may contribute to the cooling of inflation is the reduction in taxes made by the government. In conjunction with the statements made by the Central Bank president, Copom’s minutes also indicated that the increase in the Selic rate, by 1 percentage point in May, should continue to combat inflation.

3. Public management retreated to a negative trend for the coming week. Following the example of what had already occurred last week at the Ministry of Justice, in a case where the principle of impersonality seemed to have been abandoned, the episode at the Ministry of Education is another example of the same practice. By saying that he gives priority to the friends of pastors and by indicating that he wants help in building churches, the permanence of Minister Milton Ribeiro is shown to be inconvenient. It may be that he remains, as a way of not assuming the error and of not letting the matter spill over to evangelicals or President Bolsonaro.

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