BRAZIL-Crystal balls

The Finance Minister has crystal balls

Finance Minister Nelson Barbosa has not one but two crystal balls. Having been Planning Minister and is now Finance Minister he not only knows the “plan”, he is now in charge of executing it.

That unique condition allows him to take his balls to the presidential palace to negotiate budget cuts with President Dilma Rousseff. Barbosa estimates that expense reductions on the order of R$ 50 billion to R$60 billion should be sufficient to reach a “primary budget surplus” (i.e. revenues less expenses before interest) to offset some of the interest on the national debt.

So far, however, he has only come up with R$ 16 billion to R$ 18 billion. Something seems to be wrong.

The scuttlebutt so far is that the cuts are going to have to reach down to some of Dilma’s pet projects like Minha Casa-Minha Vida (the low-cost housing program) and Bolsa Família (the income maintenance program). Dilma has been advised by many of the social movements that support the PT that cuts in those programs will cause even further erosion of her popularity (if that’s possible) and further complicate Lula’s dream of returning to power in 2018.

The announcement of the cuts was therefore moved forward to March but now Barbosa was quoted that he will announce at least some of them by the 19^th before he heads for China. (Kind of confusing, I know, but what else is new?)

Meanwhile, Lula is facing problems of his own. The Lava-Jato investigation has been extended to his alleged undeclared ownership of two properties developed or improved by construction companies involved in the Petrobrás financial scandal. She reportedly will met with Lula in São Paulo to devise some sort of explanation or PR strategy in his defense.

The “market” is decidedly confused. Everything now hinges on Barbosa’s crystal balls.