By Anthony Boadle
BRASILIA (Reuters) – Brazilian President Michel Temer has burned
through political capital fighting corruption charges and is
struggling to push forward his economic agenda meant to rein in a
gaping budget deficit.
Even allies in Congress now doubt he can achieve anything but
watered-down measures, likely delaying any fix to Brazil’s fiscal
crisis until the economy recovers from deep recession.
With continued deficits, Brazil risks further downgrades in its
credit rating. It lost its investment grade two years ago, adding
to the cost of financing mounting public debt.
In a sign of Temer’s failure to restore fiscal health, the
government is expected to revise upward its 2017 and 2018 deficit
targets on Monday due to falling tax revenues in an economy that
is barely growing.
More pessimistic analysts worry the insolvency already faced by
some Brazilian states that cannot pay employees or provide basic
services will reach the federal government.
Temer had a window to pass a pension overhaul earlier this year,
but it closed in May when allegations emerged that he condoned
bribes in a taped conversation with the then CEO of the world’s
largest meatpacker JBS S.A..”We are dancing samba at the edge of
the precipice,” said Sao Paulo-based wealth manager Fabio
Knijnik. “I don’t see the political class at all concerned with
The deeply unpopular president won enough backing in Congress on
Aug. 2 to block a corruption charge that could have led to his
suspension pending trial by the Supreme Court. To survive, he
approved about $1.5 billion in pork barrel spending to keep
His closest ally in Congress, the center-right Democrats Party of
Speaker Rodrigo Maia, does not believe Temer has the 308 votes,