Dilma Rousseff takes charge in Brazil, nods to Wall Street
Dilma Rousseff is planning budget cuts of up to $15 billion, slightly more than most investors had expected, to help rein in a recent burst in government spending.
São Paulo, Brazil
President Dilma Rousseff kicked off her government Monday with a series of market-friendly signals, including new details on budget cuts and a report that she will turn to the private sector to help solve one of Brazil's biggest infrastructure bottlenecks.Skip to next paragraph
Subscribe Today to the Monitor
Rousseff is planning budget cuts of up to 25 billion reais ($15 billion), slightly more than most investors had expected, to help rein in a recent burst in government spending, reported several Brazilian media including Estado de S.Paulo.
Wall Street investors are awaiting details of how Rousseff, a pragmatic leftist who was inaugurated as president Saturday, will implement austerity measures and take other steps to ensure Brazil's economy continues its impressive growth.
The first woman to lead Brazil spent most of Sunday in private meetings with foreign dignitaries who came to see both her and her popular predecessor, Luiz Inacio Lula da Silva, whose mix of stable fiscal policies and social welfare programs Rousseff has promised to emulate.
Rousseff and her top officials are expected to spend Monday focusing on economic matters. Planning Minister Miriam Belchior was scheduled to speak to reporters, and Alexandre Tombini could also provide his latest thoughts on rising inflation when he is sworn in as the new chief of Brazil's central bank.
One of the other main challenges for Brazil is how to expand its infrastructure to keep pace with an economy expected to cool down in 2011, but is still forecast to outpace much of the world and grow between 4 and 5 percent.
In a decision that could herald a greater-than-expected reliance on private capital to solve infrastructure bottlenecks, Rousseff will turn to private companies to build a badly needed new terminal at Sao Paulo's main international airport, Folha de S.Paulo newspaper reported.
Brazil's airports are currently run by state agency Infraero, which has failed to keep pace with booming passenger demand as millions of Brazilians join the middle class and the country prepares to host the 2014 World Cup and 2016 Olympics.
Rousseff also plans an initial public offering for Infraero, Folha reported, citing unnamed advisers.
Both decisions are surprising because Rousseff repeatedly slammed previous governments' privatization plans during her presidential campaign. News of the apparent about-face, and its timing, are likely intended as a sign to investors that Rousseff will tack toward the more business-friendly wing of her party during her administration's early days.
A Rousseff spokesman was not immediately available.
Other challenges for Rousseff will include Brazil's overvalued exchange rate, which is damaging manufacturers.
Sources close to her government told Reuters last week that Rousseff is planning aggressive measures including targeted tariff increases and tax breaks to aid local industry.
Inflation has also ticked up in recent months, due largely to food prices but also to a burst in election-year government spending that probably caused Brazil to miss its main budget target for 2010.
Annual inflation is running at 5.79 percent, well above the center of the government's year-end target of 4.5 percent, plus or minus 2 percentage points.
Tombini, the new central bank chief, is widely expected to raise interest rates from the current 10.75 percent level at his first policy meeting later this month.
Investors will be eagerly scouring any statement from him Monday to confirm that the new president of the Central Bank, a respected long-time veteran of the institution, will be able to resist political pressure from some officials in Rousseff's government who believe interest rates are already too high.
($1 = 1.66 reais)