The Week Ahead in Brazil #117

1. Politics – Competing for the votes of 156.4 million voters, the electoral campaign began on Tuesday (16) and will run until October 1. The free electoral propaganda on radio and television will be from August 26 to September 29. (Valor)

On Tuesday (16), Justice Alexandre de Moraes has become the president of TSE. Moraes made a strong speech in favour of democracy and the electoral system. Several public authorities – such as President Jair Bolsonaro (PL) and the presidents of the lower house and the Senate – attended the event. Former presidents José Sarney, Lula, Dilma and Michel Temer also attended the ceremony. (Estadão)

President Jair Bolsonaro (PL) was involved in a quarrel with a YouTuber as he left the Alvorada Palace on Thursday (18). (O Globo)

Several relevant polls were released this week. The FSB/BTG Research shows Luiz Inácio Lula da Silva (PT) ahead of the voting intentions in the first round with 45% (+4pp), followed by Jair Bolsonaro (PL) with 34% (stable). The government is considered as “bad/terrible” by 44% (stable) of the population and “great/good” by 33% (stable). The disapproval rate is 54% (+1pp) and the approval rate is 38% (-2pp). The poll was conducted by telephone with 2,000 voters from 12 to 14 August.         

Ipec/Globo’s first presidential poll this year, which can be read here, points out that Lula (PT) has 44% of voting intentions in the first round against Bolsonaro (PL), who has 35%. The government is disapproved by 57% and approved by 37%. The survey was conducted face-to-face with 2,000 voters between 12 and 14 August.

Another relevant poll released this week is the Quaest/Genial poll, which shows Lula with 45% (+1pp) of voting intentions, against 33% (+1pp) for Bolsonaro. The poll interviewed 2,000 voters in person between 11 and 14 August.

The PoderData poll shows Lula with 44% (+1pp) of voting intentions, against 37% (+2pp) for Bolsonaro. The survey was conducted between 14 and 16 August by telephone with 3,500 voters. The government is disapproved by 56% of voters, to approved by 40%.

Finally, the Datafolha survey, conducted in person between 16 and 18 August, with 5,744 voters, shows Lula with 47% (stable) of the voting intention and Bolsonaro with 32% (+3pp). The government is considered “bad/terrible” by 43% (-2pp) and “great/good” by 30% (+2pp) of voters.

Here is the selection of electoral surveys:

2. Economy – Petrobras has announced a further reduction in the price of a litre of petrol at refineries from R$3.71 to R$3.53. It is the fifth time the state-owned company has made cuts in fuel prices. The result led Bank of America to revise Brazil’s 2022 GDP from 1.5% to 2.5%. (Valor)        

The Central Bank Economic Activity Index (IBC-Br) rose 0.69% in June, in the seasonally adjusted comparison with May, driven by the good performance of the services sector. (Valor)

The Independent Fiscal Institution (IFI) has estimated a primary surplus of R$ 27 billion for the central government this year. The last time the primary result was in positive territory was in 2013. (Valor)

3. Public administration – The Brazilian National Health Surveillance Agency (Anvisa) overturned on Wednesday (17) the mandatory use of masks on aeroplanes and at Brazilian airports effective immediately. (Valor)

The auction of the 7th round of airport concessions ended with a total grant of R$ 2.72 billion and investments of R$ 7.3 billion for the next 30 years. The three blocks auctioned were won by the Spanish company Aena, XP Asset and the Socicam consortium. With this, Brazil will have 90% of its passenger flow in privatised terminals. (Folha)

The Federal Supreme Court (STF) decided that the new Law of Administrative Improbity should be applied to lawsuits still in progress. This decision may favour politicians and public managers already convicted of administrative improbity, but whose appeals are still pending judgment. The new legislation does not apply to cases already closed. (Valor)

An analysis:

1. The political trend continues positive. The distension between Bolsonaro and the Judiciary advanced this week. The movement in support of democracy and the electoral system, which emerged after Bolsonaro’s meeting with foreign ambassadors, peaked at Alexandre de Moraes’ speech at the TSE. Bolsonaro and his allies saw the rapid growth of a wide range of society supporting the legitimacy of the electoral process, something he had been positioning himself more strongly against in recent months.

But why hasn’t he turned up the heat? The first reason is that powerful public and private actors have unequivocally come out in majority support of electoral institutions, including key players in the political process such as the mighty speaker of the lower house, Arthur Lira. The electoral system can always improve, as can the Judiciary, but the way in which Bolsonaro had been making these criticisms was no longer acceptable to these players. The second reason is that Bolsonaro’s campaign notes that he has a much better chance of going to the second round today than before. The distance between Lula and him has reached the lowest point according to the monitoring of electoral polls. It would be imprudent to risk this growth trend with a rising economy in the face of a stagnant, but well-positioned, Lula.

2. The economy continues to trend favourably. A positive combination of the high economic activity indicators with the price variation indexes shows deflation. The outlook is for further declines, both in the IGP-10, with deflation of 0.7% in August, as well as the IPA-10 (deflation of 0.65%) and IPC-10 (deflation of 1.6%). The drop in fuel and energy prices contributed decisively to this scenario.

Next week, the IPCA-15 is expected to show deflation. It is possible that 12-month inflation will return to single digits.

3. After 5 months of neutral or negative trends, public administration entered a positive trajectory. It was a general improvement, past. The leadership of the Judiciary and the Legislative seem to have reached an understanding on electoral issues and this puts public administration on its usual course.

Another important aspect concerns public policies. Both Anvisa’s decision on masks and the auction of airport concessions to the private sector are decisions that have matured in the administration and are beginning to generate results for the population in general.             Finally, the consolidation of the understanding of the new Law of Administrative Improbity (LIA) may have ramifications beyond the political question, causing an improvement in the paradigm of public administration. The emphasis in the news has been more on the issue that the law can loosen the fight against political corruption, but there is another critical aspect that has not been given due importance. The new LIA restores managers the ability to develop public policies in innovative and more effective ways. It may have represented the end of the “blackout of the pens”, a term coined by Francisco Gaetani that masterfully captures the situations in which managers are just afraid of doing something absolutely correct and legal, but that could lead to administrative misconduct proceeding.

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