The Week Ahead in Brazil #97

What is happening in Brazil?

1. Politics – Minister Milton Ribeiro (Education) resigned from his post on Monday (28). In 10 days of the crisis, audios emerged in which Ribeiro affirmed the role of pastors accused of undue influence in the folder. Then came accusations of mayors revealing that the pastors charged bribes and requested the purchase of bibles to unlock funds in the budget. The last straw was the revelation of the delivery of bibles, in an official event of the Ministry of Education, with the minister’s photo and Pastor Gilmar Santos and record that they had been purchased by the city hall of Salinópolis (PA). (Estadão)

In the presidential election race, the governor of Rio Grande do Sul, Eduardo Leite, announced, on Monday (28), that will remain in the PSDB and resigned from office. Mr Leite decided not to accept the invitation made by the president of the PSD, Gilberto Kassab, to run for the Presidency. Mr Leite did not say, however, if he will try to be a candidate for the Planalto by the party or if he will run for another position in the elections this year. (Estadão)

After a meeting with party members, João Doria (PSDB), the governor of São Paulo, kept his candidacy for the Presidency and resigned from the government of São Paulo. The decision was taken after Doria received a gesture of support from the party and also because of pressure from allies who wanted him out of state management. The legend intends to launch Rodrigo Garcia in the race for the government of SP – and the permanence of Doria in office would dehydrate the campaign. (g1)

Ten ministers left their posts to run for elected office as deputies, senators and governors. (Folha)

Finally, the last major electoral change came from former minister Sérgio Moro. He moved from Podemos to União Brasil. Mr Moro abandoned his candidacy for the presidency and will seek a mandate for the lower house or the Federal Senate. (Estadão)

President Jair Bolsonaro (PL) once again criticized the judiciary over the outcome of the 2022 elections in a speech on Wednesday (30) in Rio Grande do Norte. He said that the votes of the elections will be counted, without explaining how, since the printed ballot was overturned by Congress amid coup speeches by the president of the Republic. Bolsonaro returned to the subject, in an exalted tone, on Thursday (31), in a ceremony to change the command of ministries. (Folha)

Justice Rosa Weber, of the Federal Supreme Court (STF), denied the request of the Attorney General’s Office (PGR) to end the case investigating whether President Jair Bolsonaro (PL) committed a crime in the Covaxin case. (CNN)

With the closure of the party swap window, according to the lower house website, PL became the largest party in the lower house. It went from 33 elected federal deputies to 73, surpassing initial estimates. PT follows as the second bench, with 56 deputies, PP in third place with 50 and União Brasil with 47, in fourth place. The Republicanos went from 30 to 45 federal deputies. (See)

PoderData poll shows that 29% of voters consider Bolsonaro’s work as great or good, and 50% think it is bad or terrible. Regarding support rates, 55% disapprove of the government, while 37% approve. (Poder360)

The survey also indicates that Luiz Inácio Lula da Silva (PT) has 41% of voting intentions, while President Jair Bolsonaro has 32%. Lula’s voting intentions increased by 1 percentage point and Bolsonaro’s increased by 2 pp. The poll interviewed 3,000 people by telephone between March 27 and 29. (Poder360)

Here is the compilation of the electoral polls:

2. Economy – The collection of federal taxes and contributions reached R$ 148.66 billion in February. It is the best result for the month in the Federal Revenue Service’s historical series, which began in 1995. (Poder360).

Even with record revenues, central government accounts registered a R$ 20.6 billion deficit in February. The value was expected by the market.

The choice of Adriano Pires as the new president of Petrobras was interpreted as a pro-market decision, whose investors demand the maintenance of Petrobras’ price readjustment policy, which follows the international market price trend. Pires, however, seems to defend some form of compensation for the consumer.

Brazil closed in February 2022 with the creation of 328,507 formal jobs, according to the balance of the General Cadastre for Employed and Unemployed (New Caged). The February balance was the result of 2.013 million hirings and 1.685 million dismissals. According to the report, it was the best result for the month in the series started in 2010, second only to 2021, when the balance was 397,915 jobs. (Agência Brasil)

The unemployment rate from the Continuous National Household Sample Survey (Pnad Contínua) was also released. The rate was 11.2%, in the mobile quarter ended in February, and was the lowest for the period since 2016 (10.3%). (Valor)

In March, Ibovespa, Brazil’s main stock index, recorded its fifth consecutive month of highs, closing the first quarter of the year with a 14.5% increase. In the first three months of 2022, R$ 83.5 billion in foreign investments have already arrived.

The government held the auction of Companhia Docas do Espírito Santo (Codesa), which involves the ports of Vitória, in the state capital, and Barra do Riacho, in Aracruz, on the northern coast of Espírito Santo. Bought for R$ 106 million, Codesa is the first port sector concession in the history of Brazil. (Brazil)

The Minister of Economy, Paulo Guedes, travelled to Europe where he meets with French and Spanish government authorities, businessmen and executives this week. On the agenda, the process of Brazil’s accession to the Organization for Economic Cooperation and Development (OECD) will be one of the priority topics. Besides advancing in the talks with the international organization – after the entity formalized, in January, the invitation for the country to join – the minister will present to investors the results of the measures and reforms being implemented in the country by the federal government. (Brasil)

3. Public management – President Jair Bolsonaro decided to fire Joaquim Silva e Luna from the presidency of Petrobras. The Army general had been in the position for only one year and will be replaced by the director of the Brazilian Infrastructure Center (CBIE), Adriano Pires. (Estadão)

In the ten changes in command of ministries, at least for now, the new ministers are all current members of the government.

An analysis:

1. A fascinating week for politics, which continues with a positive trend for the coming week. The parliamentary support base for the government came out of the party window strengthened, the levels of popular support remain stable and the electoral survey did not bring any surprises. The level of institutional tension, however, has worsened, but not to the point it had reached last year during the September 7 acts.

First, it is important to assess the changes in political support for the government at the end of the party window. According to official records, PL, PP and Republicanos add up to 168 deputies. In the 2018 election, they were 101. The PSL, Bolsonaro’s former party that merged with the DEM in União Brasil, had elected 52 deputies in 2018; now, the PL, the president’s current party, has 73 MPs. This is important so that the government can advance on priority agendas and delay the processing of unfavourable proposals. It’s not a free pass to approve whatever it wants, especially the reforms, but the situation has become more comfortable.

In addition to providing greater parliamentary support, this more robust base also influences the electoral component. With more parliamentarians, Bolsonaro’s presidential campaign gains municipal capillarity, something it did not have in 2018. Together, PL, PP and Republicans elected mayors in 1,232 municipalities in 2020; PT and PSB, for example, command 269 cities. That’s without considering the MDB and its 775 municipalities. They should not, at least for now, have close support for one or another candidate, but there is proximity with the government if we consider that there are two deputy leaders in the Senate of the MDB and the leader in Congress is also from the MDB. The PSD, with 650 mayors, and the PSDB, with 512, are the major parties with the greatest number of mayors.

Still, on the electoral issue, the next polls should capture how Moro’s 8 percentage points will be distributed among the candidates. The average Moro voter has a college degree, is middle class and lives in the Midwest, South and Southeast. The withdrawal of the former minister and judge should favour Bolsonaro relatively more than Lula, but it may also be that the third way – still unviable – will benefit to some extent. If, on the one hand, Moro’s departure initially increases polarisation and makes it difficult for an alternative to Lula or Bolsonaro to emerge, on the other, it may contribute to the consolidation of political support for another candidate, such as Dória, Leite or Tebet. Only in July should the scenario become clearer.

About institutional conflicts, as the articulations advance, it will be more frequent to see Bolsonaro antagonizing the Judiciary. The party conventions will take place in early August and the deadline for registration of candidacies is August 15.

In relation to approval and disapproval ratings, there have been no major changes, but the current scenario is more favourable to the government.

2. The economy continues with a positive trend for the next week. Despite high-interest rates and still high inflation, the monetary policy is showing signs of working. Furthermore, the appreciation of the real against the dollar, both due to interest rates and commodity prices, tends to continue with the inflow of capital into the stock market. All this contributes to a drop in inflation.

The fiscal policy also continues strong, with high tax collections. The issue of the increase in the federal civil service deserves to be closely watched. It seems that not everything will be passed, but the pressure is very strong and the government may not be able to hold it back. Finally, unemployment remains high but is showing signs of receding. There has been a lot of criticism in the press about the fall in the average income of the worker, associated with the increase in inflation. The criticism is valid, but for the worker, it is better to earn a little less than being unemployed.

3. The trend in public management remains neutral for the next week. The quick departure of the Minister of Education was positive. If he insisted on staying in office, the government could be absorbed in damage control and Education could bleed further. Another positive point was the ministers’ replacement for people already inside the public machine. With that, at least for now, there were no major ruptures in the ministries, both from a political and technical perspective. pers.

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