Poll blow to Rousseff over austerity plan

http://www.ft.com/cms/s/0/9a1e0e12-d8c2-11e4-8a23-00144feab7de.html#ixzz3WBYXzguZ

April 2, 2015 12:42 am

Poll blow to Rousseff over austerity plan

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Joe Leahy in São Paulo/FT

Dilma Rousseff’s popularity has fallen to its lowest level in more than four years as Brazilians reject her government’s austerity programme.

The findings from a CNI-Ibope poll, which fit with those of other surveys and follow a mass protest in Brazil last month, underline the challenge facing the president’s efforts to set the country’s public finances back on track and avoid a sovereign credit rating downgrade.

The CNI-Ibope poll showed the percentage of voters ranking the president’s government as good or excellent had plunged from 40 per cent in December before the start of her second term on January 1, to only 12 per cent.

“President Dilma Rousseff is starting her second mandate with the worst level of popularity of her government,” CNI-Ibope said in a statement.

The president and her left-leaning Workers’ party won re-election last year with a campaign that dismissed concerns about Brazil’s economy in spite of near zero growth and persistent inflation.

On returning to office, however, she immediately launched an adjustment programme, allowing the central bank to ramp up interest rates to control inflation and selecting a hawkish new finance minister, Joaquim Levy, to plug a hole in the country’s fiscal accounts.

Economic growth last year was just 0.1 per cent, with some analysts forecasting a recession for this year as the austerity measures — which include budget spending cuts and tax rises — take hold and unemployment rises.

“The fundamental question is whether the government, weakened by low approval ratings, will be able to impose the minimum dosage of adjustments that are necessary to correct the macroeconomic imbalances,” said Carlos Langoni, former central bank governor, in a research note, the Brazil Memo.

The fundamental question is whether the government, weakened by low approval ratings, will be able to impose the minimum dosage of adjustments that are necessary to correct the macroeconomic imbalances

– Carlos Langoni, former central bank governor

More than 1m people took to the streets last month to call for the impeachment of Ms Rousseff amid anger over a scandal at Petrobras in which former directors of the state-owned oil company are accused of colluding with politicians and contractors in exchange for bribes.

While most analysts still see the chances of impeachment as remote, the Petrobras scandal has further complicated the outlook for Ms Rousseff only three months into her second term.

The CNI-Ibope study found that about nine in 10 of those surveyed disapprove of Ms Rousseff’s policies on interest rates and taxes.

High interest rates and rising taxes are hallmarks of the president’s austerity plan as she seeks to quell inflation, which is running at about 8 per cent, well above the government’s target of 4.5 per cent.

Meanwhile, the proportion who see her government as bad or terrible rose from 27 per cent in December to 64 per cent in March. The number who see it as regular or normal fell from 32 per cent to 23 per cent.

However, Ms Rousseff is unlikely to abandon her fiscal plan in spite of the negative polls, according to Eurasia Group, a research group.

“The deepening of the crisis is raising the awareness within the government of the importance of doubling down on the fiscal adjustment plan, regardless of the immediate economic and political costs,” Eurasia Group said in a research note.

Copyright The Financial Times Limited 2015.

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