Brazil: Dilma Rousseff is elected president
October 31, 2010
Dilma Rousseff was elected president in runoff elections on 31 October. The ruling Worker's Party (PT) candidate won 56% of the valid votes, against 44% of her opponent Jose Serra from the Social Democracy Party (PSDB). The result was broadly in line with the latest vote intention polls. After being elected, Rousseff adopted an investor-friendly tone, reiterating her intentions to maintain economic stability and to reduce the country's public debt, which would leave ?no technical reason for Brazil's interest rates not to converge to international levels?. Still, on the economic front, no substantial changes are expected, as political analysts anticipate a ?more of the same? administration, which can be interpreted as a continuity of Lula's second term, rather than a return to his first term policies, when most of the economic reforms have been implemented. The market's main concern is about Rousseff's commitment to promote fiscal adjustment, as government spending has been growing faster than public revenues since the beginning of Lula's second administration. Rousseff said her goal is to cut net public debt from the current 41% of GDP to 38% of GDP by the end of her four-year term. Following the elections, the spotlight is moving to the announcement of the cabinet members, in particular the positions for finance minister, central bank governor, chief of staff and president of the Brazilian development bank (BNDES). Depending on the composition of the new cabinet, the market will evaluate the likelihood of structural changes in the country's economic policy during the Rousseff administration, in particular those regarding the fiscal agenda.