Brazil’s next president faces tough austerity juggling act

Aerial view of a demonstration in support of Brazilian right-wing presidential candidate Jair Bolsonaro at Paulista Avenue, in Sao Paulo, Brazil on September 30, 2018. (AFP)
Updated 01 October 2018
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Brazil’s next president faces tough austerity juggling act

  • There are also 13 million people unemployed in a country with a population of 208 million that ranks ninth in the world in terms of social inequality
  • Public debt hit 77 percent of gross domestic product in July, up from 56 percent in 2014

RIO DE JANEIRO: Whoever wins Brazil’s presidential election on October 7 will have their work cut out juggling market pressure to implement austerity measures while trying to drag 23 million people out of poverty.
According to a World Bank report presented to the 13 candidates, Latin America’s biggest economy is facing “three main challenges: a major fiscal imbalance... a lack of sustainable growth in productivity... (and) the state’s ever increasing difficulty in providing basic public services.”
In Brazil, “part of the population still lives in the 19th century and the other part is already in the 21st century,” says Marcelo Neri, an economist at the socioeconomic think tank Getulio Vargas Foundation.
Neri says millions of Brazilians have a poor education, live without access to water and sanitation, and are confronted by “levels of violence worthy of a war.”
As for the economy, it’s struggling. Public debt hit 77 percent of gross domestic product in July, up from 56 percent in 2014. The World Bank says it won’t stabilize unless Brazil manages an unlikely 4.0 percent annual growth through to 2030.
Without deep structural reforms, the debt could reach 140 percent of GDP, the World Bank says.
While hugely unpopular outgoing President Michel Temer has frozen public spending, he has left hanging the delicate question of pension reform, considered by the markets as a cornerstone to fiscal consolidation.

Most presidential candidates are proposing pension reform and a program to reduce the public deficit, but without going into specifics on the figures for fear of losing votes.
Right wing frontrunner Jair Bolsonaro has proposed a transition toward a system of funded pensions and a 20 percent reduction in the public debt through “privatization and sales.”
His closest rival, the leftist Fernando Haddad, is offering the opposite: “an end to privatization” while he intends to “increase employment” and “battle tax dodging” in order to balance the public books.
Former Sao Paulo state governor Geraldo Alckmin has made an ambitious promise to wipe out the public debt “in two years” through privatization and a simplified tax system.
The problem is that while candidates focus on trying to win votes, they might ignore the most pressing issues affecting those most in need.
Neri says the country needs social “inclusion policies” but fears that “the elections aren’t heading in that direction.”
Six million (33 percent) more people live in poverty than in 2014, the Getulio Vargas foundation says.
There are also 13 million people unemployed in a country with a population of 208 million that ranks ninth in the world in terms of social inequality.
Marcos Lisboa, president of teaching and research institute, Insper, is concerned that all the candidates are traveling a worryingly well-trodden road.
“The worry is that debates on the most urgent problems are ditched in favor of proposals that either reproduce the disaster the country went through these last few years, or that promise the moon,” says Lisboa.
Brazil needs to choose the “middle path,” says Neri, between those who advocate austerity after two years of recession followed by two more of weak growth, and those who believe that such a policy would finish off the sick patient.


Modi secures a second five-year term with landslide win in Indian elections

Updated 2 min 51 sec ago
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Modi secures a second five-year term with landslide win in Indian elections

  • The governing alliance, led by the Bharatiya Janata Party, sweeps back to power after a bitter campaign

NEW DELHI: India’s governing Bharatiya Janata Party (BJP) on Thursday scored a landslide election victory, increasing its seats in Parliament after a bitter and divisive campaign.

The results amount to a massive blow for the 133-year-old Congress Party, which dominated India’s political life for more than 50 years after the country gained independence in 1947. Narendra Modi has made history by becoming India’s first prime minister in the last 40 years to be re-elected with a parliamentary majority.

The BJP on its own is expected to have a little over 300 seats in the Lok Sabha (lower house), more than it had in the outgoing chamber. The ruling National Democratic Alliance (NDA), of which the BJP is a part, will have nearly 350 MPs in the Lok Sabha.

The Congress Party is expected to finish with just 55 seats, albeit 11 more than its 2014 election tally. By most projections, the Congress-led opposition alliance will not even have 100 seats. Congress Party President Rahul Gandhi suffered a major personal setback in the family borough, the constituency of Amethi in northern India, where he lost to a Modi Cabinet minister. But Gandhi won his second seat in Wayanad in the south by a big margin. 

“I concede defeat and congratulate Prime Minister Narendra Modi for winning the elections,” Gandhi said on Thursday. He has offered to resign from his post in his party’s most powerful organizational body, the Congress Working Committee, but political analysts say it is highly unlikely that his resignation will be accepted.

The margin of the BJP’s victory has come as a surprise to many, with the party not only retaining its seats in the battleground states of northern and western India, but also expanding its footprint in two eastern states: West Bengal and Odisha. “Together, we’ll build a strong and inclusive India. India wins yet again!” Modi tweeted after the results showed the BJP sweeping to victory.

Modi’s India can do its bit for Middle East and Gulf stability

Shashi Shekhar, a New Delhi-based political analyst, told Arab News: “This is a phenomenal election victory that has stumped all the pollsters. The BJP was expected to face a big challenge from the opposition alliance in some of the crucial states, such as Uttar Pradesh and Maharashtra, which together account for 128 seats. But it seems the narrative of muscular nationalism propagated by the BJP overcame all challenges. There’s a now a genuine fear that if the BJP continues with its old policy of marginalizing religious minorities, India might turn into a majoritarian state. However, I hope Modi’s second term turns out to be more inclusive.”

Sudheendra Kulkarni, a Mumbai-based political commentator, said: “The Congress Party failed to capture the imagination of the people. The party’s slogans didn’t click with voters the way the BJP’s did.”

Against this backdrop of an imminent decisive win, Modi began to receive messages of congratulations from world leaders on Thursday. Among them was Pakistani Prime Minister Imran Khan. “I congratulate Prime Minister Modi on the electoral victory of BJP and allies. Look forward to working with him for peace, progress and prosperity in South Asia,” Khan tweeted.

In his second term, in addition to addressing economic problems at home, Modi will need to keep a close eye on relations with neighboring Pakistan. Bilateral relations remain tense months after they came close to war following a deadly attack in Indian-administered Kashmir on paramilitary soldiers, and an Indian air raid deep inside Pakistan.

“There’s no alternative to dialogue,” said Kulkarni. “We should expect that with a renewed mandate (for Modi’s government), there should be a fresh attempt to engage with Islamabad.”