Major challenges facing Brazilian president's 2nd term

Updated: 2015-01-03 03:35


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BRASILIA - Brazilian President Dilma Rousseff listed better education, renewed economic growth and anticorruption as three major challenges to her second term, which began Thursday with an inauguration.

Rousseff, re-elected in a tightly contested race in October for another four-year term, would also face such challenges as governing in a period of economic stagnation and a stronger political opposition in the parliament, experts say.

In her first speech following the swearing-in ceremony, Rousseff said she aimed to build a "country that educates," raise the average level of schooling and guarantee broader access to education, an objective that will require more spending on the sector.

Experts say Brazil's low level of education and the situation of the public school system are among the biggest obstacles facing the efforts to boost the country's economic productivity.

At the same time, Rousseff expects to promote economic stability, control inflation, increase fiscal discipline and recover the confidence and the trust of the business sector.

"Brazil is determined to resume growth," said Rousseff in the speech to the parliament, adding that "the first steps of this journey are an overhaul of public accounts, increasing domestic savings, beefing up investments and improving productivity."

She has elected economist Joaquim Levy, known for his conservative views, to head her new economic team. Levy will be charged with implementing tough cost-cutting measures to rebalance public-sector finances.

But that may not be enough given that Brazil's economic growth rate in 2014 was expected to be a scant 0.2 percent, far below the government's initial forecast of 2.5 percent. Meanwhile, the inflation was registered at around 6.5 percent, near the upper limit set by the government of 4.5 percent with two points of wiggle room.

Low economic growth has raised fears of rising unemployment, as exports and domestic sales fell.

Recovering confidence of the market will be another difficult challenge, as many investors and the financial market gradually withdrew their support for Rousseff due to what they perceived to be heavy-handed measures to control the economy during her first term.

Rousseff, however, is optimistic about Brazil's ability to turn its sluggish economy around, stressing that the country remains the world's seventh largest economy, second largest exporter of food, and third largest exporter of iron ore.

As proof of the economy's sound macroeconomic foundations, she noted that the public-sector debt had been cut in the past four years, while foreign reserves had reached a historical peak of 375 billion, and the unemployment rate was at an all-time low.

Yet another challenge to spurring business in 2015 will be tackling corruption, especially at the state-run oil giant Petrobras, currently mired in a multibillion-dollar graft scandal involving a former director and possibly various members of the ruling Workers' Party.

Rousseff promised to embark on an anti-corruption crusade in response to the scandal. "Petrobras is Brazil's most strategic company. We are determined to punish those responsible without weakening the firm."

She also said she would promote a national pact against corruption in the political class and the private sector as well.

No matter what policies Rousseff plans to carry out in her second term, she would be faced with a bigger opposition bloc in the parliament, especially in the lower house, or the Chamber of Deputies, which was largely renewed with more conservative representatives.

Another priority for Rousseff is to reform campaign finance to ban big business funding of political candidates, a promise she made in mid-2013 following mass anti-government protests. To pass such a constitutional reform through the parliament, the president plans to organize a plebiscite first.