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It’s lame duck time for the Brazilian president

Officially, the congressional holiday starts on Wednesday (18(th) July), but after voting on the 2019 budget guidelines bill this Wednesday, the lawmakers will not come back to Brasília next week.

Importante: os comentários e opiniões contidos neste texto são responsabilidade do autor e não necessariamente refletem a opinião do InfoMoney ou de seus controladores.

Michel Temer
(Beto Barata/PR)

Erich Decat, Brasília

We can consider this week as the last one for Brazilian president Michel Temer’s administration.

From now on, effectively, the president and the members of the current government will just wait for the October general election results and the next presidential inauguration ceremony to be held on 1st January 2019.

Until then, the current government won't be able to pass any structural proposals in Congress where the main economic changes can be made.

Officially, the congressional holiday starts on Wednesday 18th July, but after voting on the 2019 budget guidelines bill this Wednesday, the lawmakers will not come back to Brasília next week.

In addition, they may not return at the beginning of August, when the recess ends, either. Some of them may come back at the end of next month but it is unlikely that there will be a quorum for passing structural changes.

In effect, during this time, the congressmen will mostly be focused on electoral battles and how they can be re-elected in October for another four-year mandate.

Besides that, the electoral outcomes might be known only in early November, when traditionally the elected president introduces their new policy and economic agenda and starts negotiating a cabinet reshuffle.

Politically, how might Michel Temer finish his mandate?

Five months before leaving office, Michel Temer, from the centre-right party MDB, is the most unpopular president since 1989, when this kind of survey started being conducted. According to Datafolha, a well-known Brazilian polling institute, 82% reject Michel Temer's government. In the same way, 72% consider that the economic situation has worsened in the last months.

Because of these numbers, the main centre-right candidates have made an effort to disassociate themselves from the current president and tightly managed to avoid being dragged down by his unpopularity. Even Temer's former Finance minister and presidential candidate, Henrique Meirelles, has sought a way to not be linked with him.

The beginning of the end

In Congress, the strength of Temer’s coalition started weakening in the middle of 2017, when he spent his political capital to shoot down two lawsuits issued by the Supreme Court two months apart against him.  In Brazil, a legal process against a president can only start after a lower house endorsement.

On two occasions, between August and October of 2017, Temer's future was placed in the congressmen’s hands. In exchange for ridding him of the trials, they asked for pork barrel increments.

According to the Estadão newspaper, the amount of pork distributed among the congressmen was R$ 10.7 billion (almost U$ 2.7 billion), at the end of the last year. This sum is 48% bigger than in 2016.

Although he managed to survive, since then Temer's political support has sharply decreased.  Bear in mind that after Dilma Rousseff's impeachment in 2016, Temer was backed by at least 367 lawmakers in the lower house. With this support, he built a path to approve the controversial debt ceiling bill at the end of 2016.

Currently, this political success is only visible in the rear-view mirror and is gradually turning into a speck. At the beginning of this year, after tackling the possible trials, Temer announced that the government was backing down from its pension reform bill.

On the other hand, he launched a package of fifteen economic measures that might be voted on by congressmen as soon as possible. In some way, these measures were an attempt to maintain some support for the financial market, which has been pressing for a pension reform.

In sum, most of these bills didn't advance. On the list was the privatisation of Eletrobras (the state-owned energy company); the agreement on the onerous transfer of rights of oil; a tax cut; the general Telecommunications Law; the new public finances law; and the new public procurement law.

In addition to this setback, in the last days Congress takes its summer break, its members approved a range of bills that could have a huge impact on the federal budget.

With the new rules ratified by the congressmen, some economic analysts have estimated that public spending will increase by about R$ 100 bn (almost U$ 25 bn) per year.


Proofread by Akos Gerold

Importante: os comentários e opiniões contidos neste texto são responsabilidade do autor e não necessariamente refletem a opinião do InfoMoney ou de seus controladores.


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Erich Decat

atua há 10 anos na cobertura política diária em Brasília, passando por veículos como Blog do Noblat/OGlobo, Correio Brasiliense, Folha de S.Paulo. De 2013 até 2017 trabalhou na editoria de política do Jornal Estado de S.Paulo.

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Paulo Gama

Trabalhou 8 anos na editoria de política da Folha de S.Paulo. sendo 4 anos na coluna Painel. Venceu o Prêmio Folha de Reportagem em 2016 com série que mostrou atuação de ministro de Michel Temer em defesa de interesses privados no governo.

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Richard Back

Analista político da XP Investimentos. Atua na área política desde 2004, com nove anos em Brasília. Nos últimos cinco anos passou pela assessoria de importantes lideranças partidárias na Câmara dos Deputados.

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Victor Scalet

Faz análise de política com enfoque quantitativo na XP investimentos. Foi economista na BNP Paribas Asset Management por 6 anos. É mestre em economia pelo INSPER e atualmente cursa doutorado.