* Rousseff to reassure markets she is business-friendly
* Fiscal deterioration raises risk of credit downgrade
* Rousseff to visit communist Cuba to open Mariel port
By Anthony Boadle
BRASILIA, Jan 20 Brazil's leftist President
Dilma Rousseff will try to convince the world's business elite
in Davos this week that her country is still a good investment
despite three years of mediocre growth.
The one-time Marxist guerrilla has decided to reach out to
the rich and powerful for the first time at the annual World
Economic Forum in the Swiss ski resort of Davos to reassure them
she is business-friendly and not fiscally profligate.
That is a big turnaround for a leader with a reputation for
heavy-handed policies that have squeezed profits of some
companies and hurt share prices. Dispelling skepticism about
Brazil's future will be an uphill task as Rousseff plans to seek
re-election in October.
"She will try to convince the international business
community that she is more pragmatic than ideological, but no
one really expects her government to make a huge effort to
balance its fiscal policy in an election year," said Ricardo
Ribeiro, a political analyst at MCM consultancy in Sao Paulo.
The once-booming Brazilian economy grew just 1 percent in
2012, and capital outflows last year were the highest since
2002. Public spending is rising steadily and tax revenues have
slowed due to weak growth and tax breaks aimed at stimulating
industries, raising the risk of a credit downgrade this year.
Brazil is no longer the darling of Wall Street it was during
the commodity-fueled expansion enjoyed by Rousseff's predecessor
and mentor, Luiz Inacio Lula da Silva, who, unlike Rousseff, was
a regular fixture at Davos.
Business leaders blame Rousseff for cooling investor
appetite for Brazil with her penchant for excessive government
interference in the economy. Some "creative" accounting measures
taken to meet savings targets also undermined the standing of
her economic team, but Rousseff has resisted calls to replace
Finance Minister Guido Mantega.
His poor credibility among financial professionals has meant
that the president herself has had to take on the task of
assuring investors that her government will stick to fiscal
discipline and keep inflation under control.
Mantega, who plans to join Rousseff in Davos, has seen his
credibility crumble after he burned investors with frequent
changes to tax rules, missed fiscal goals and overly optimistic
Presidential aides said Rousseff decided it was time for a
personal visit to Davos so she could show investors Brazil wants
their business, explaining private concessions her government is
granting to build roads, railways, airports and other badly
"Financial markets are not understanding Brazil well," said
Marcelo Neri, the minister of strategic affairs and head of the
government economic think tank IPEA.
"Private investment is fundamental for Brazil and the
president must show the country's potential and listen to
investors so the way we do things can be tweaked," Neri told
foreign media last week.
For the last decade, Brazil's ruling Workers' Party has
focused on reducing poverty and expanding domestic consumption,
an engine of growth that has run out of steam. To recover
momentum, Brazil now needs to raise investment sharply from the
current 19 percent of GDP, less than half the rate of China.
Rousseff will speak publicly in Davos on Friday and later
attend a fully booked private session with investors, economists
and executives of top multinational companies.
The interest in the Brazilian leader is no surprise: She is
widely favored to win a second term and decide the direction of
the world's seventh largest economy for another four years.
After Davos, Rousseff will travel to a regional summit in
communist-run Cuba where she and Cuban President Raul Castro
will inaugurate a $900 million container terminal built in the
port of Mariel by Odebrecht, one of Brazil's biggest
Mariel is expected to become a major Caribbean port when the
U.S. trade embargo on Cuba is lifted one day.
Rousseff's office stressed that Rousseff's visit to Cuba was
more business than politics. "This is not about leftist
ideology. Brazil is positioning itself strategically by
investing in post-Castro Cuba," a presidential aide said.