Brazil’s Rousseff faces drought, graft woes
February 11, 2015, 7:51 am

Thousands of protesters have been demonstrating in Sao Paulo against what they say is state corruption. Rousseff’s popularity rating has been hurt because of allegations she knew of graft at her former employer Petrobras [Xinhua]

Brazilian environmentalists say that southern coastal Brazil is facing its worst drought in 80 years with heavily populated cities like Sao Paulo now considering water rationing as an emergency measure in the weeks ahead.

The drought has also affected Brazil’s agriculture and food security, particularly in such states that have produced much of the country’s wheat – Minas Gerais.

This has led to a rise in food prices amid rampant inflation, the bane of the country’s economy.

The Central Bank maintains that a healthy inflation rate for the country is 4.5 per cent but the government has always capped a 6.5 per cent ceiling.

At the end of January, however, inflation reached 7.14 per cent, exceeding economists’ forecasts of 6.67 to 6.99 per cent for 2015.

(Inflation reached 7.6 per cent in 2004)

The inflation is worsening the outlook for the country’s GDP. Despite government predictions that Brazil’s economy will grow by 0.8 per cent this year, private sector experts say that is much too high and project a zero to 0.3 per cent growth.

They say that worsening economic data has forced them to revise forecasts downward every week this year.

Corruption scandal

But the most damaging development to Rousseff’s second term is the ever-widening corruption scandal centered around the state-run oil company Petrobras and the allegations that senior management skimmed billions in profits.

Rousseff was Petrobras chairwoman from 2003 to 2010 before she was elected President.

She has admitted that corruption did occur during her years at the helm but insists she had no knowledge till she had already left the company.

While prosecutors have not directly implicated the president nor provided evidence of her knowledge, her association with Petrobras has damaged her popularity among the electorate.

One poll on February 6 showed that 77 per cent of respondents said they believed she knew about the corruption at Petrobras.

A Datafolha poll on February 7 showed that only 23 per cent of 4000 respondents viewed her as a good or very good leader – a drop of 50 per cent compared to the same poll conducted in December 2014.

But the development-minded Rousseff is a survivor. She won the October presidential election despite having been seen as a lame duck leader.

In the build-up to the election and after, she reshuffled her cabinet to focus on revitalizing the Brazilian economy by launching what Brazilian National Development Bank (BNDES) economic advisor Ernesto Lozardo calls “fiscal re-equilibrium”.

“For now, it’s a ‘wait and watch’ policy for Brazil commentators as the Latin American giant scrambles to get its act right,” he writes.

There’s a lot riding on the new economic policy, expected to show results in the near future, he says.

If it fails, President Dilma will her lose political support in both houses, and weaken the fragile economic recovery.

The BRICS POST with inputs from Agencies