Brazilian president-elect Dilma Rousseff named a market-friendly transition team on Monday as she prepares to take the helm of a booming economy that runs the risk of being tripped up by heavy government spending and an overvalued currency.
Rousseff, who based her campaign on extending the legacy of Brazilian President Luiz Inacio Lula da Silva, won her first election on Sunday as Brazilians voted overwhelmingly for continuity.
After a bitter campaign in which she offered few specifics on her policy plans, Rousseff chose a seven-member transition team that draws heavily from the moderate wing of her left-leaning Workers’ Party, a close aide told reporters.
PHOTO: AFP
Chief among them is Antonio Palocci, a well-regarded former finance minister under Lula who is popular with Wall Street and is likely to take a prominent post in Rousseff’s administration, potentially chief of staff.
Others include Jose Eduardo Dutra, president of the Workers’ Party and a former chief executive of state oil giant Petrobras; Fernando Pimentel, a former mayor of Belo Horizonte; and Marco Aurelio Garcia, Lula’s foreign policy adviser.
Rousseff has stressed heavily since her election victory that she will run a prudent government, keeping a check on public spending and maintaining the stability of an economy that is among the world’s hottest emerging markets.
“We will not play around with inflation,” she said in one of a series of interviews with TV networks before taking off for several days to rest after an intense four-month campaign. “We will have a government that uses inflation targets in the same way that the Lula government did.”
Rousseff spent most of the day meeting with advisers and talking to foreign heads of state by telephone at her home in Brasilia. Financial markets reacted positively to her acceptance speech, in which she pledged to rein in government spending while maintaining the social welfare policies under Lula that lifted millions out of poverty.
“Markets reacted well to her words, especially when she carefully spelled out the delicate issue of public expenses,” said Fernando Mendes, head of fixed-income trading at Lerosa Investimentos in Sao Paulo.
The possibility of greater fiscal discipline led investors to bet on a medium-term decline in interest rates, which are among the highest in the world and one of the main causes for the currency’s constant appreciation.
Brazil’s stock index rose more than 1 percent.
Palocci, the face of fiscal austerity in Lula’s first term, suggested the budget could be adjusted to slow spending.
“There’s no fiscal crisis in Brazil today ... but we have no problem in finding the savings that Brazil needs to keep its debt projections on a downward trend,” Palocci said in an interview with Folha de Sao Paulo newspaper.
Still, analysts worry Rousseff is not sufficiently committed to broader changes, such as an overhaul of the nation’s bloated social security system and its suffocating bureaucracy that are crucial for long-term growth.
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