BRASILIA (Reuters) - Dilma Rousseff of the ruling Workers’ Party won Brazil’s presidential election on Sunday by a wide margin over opposition rival Jose Serra, and will become the first woman to lead Latin America’s largest country.
Rousseff, a former chief of staff under President Luiz Inacio Lula da Silva, won a strong mandate with about 56 percent of valid votes. Her campaign had benefited from a booming economy and Lula’s huge popularity.
Rousseff, 62, endorses the pillars of economic policy that have made Brazil one of the world’s hottest emerging markets. Here are some of her positions on key issues:
Rousseff would maintain the mostly market-friendly policies that have provided economic stability over the past decade: a free-floating currency, inflation control and fiscal discipline.
The career civil servant whose party has strong ties to public sector unions, Rousseff proposes maintaining fiscal discipline with gradual adjustments but has ruled out the kind of drastic austerity measures that marked the first year of Lula’s administration in 2003. She has said Brazil does not need to rein in public spending for the economy to keep growing at a robust pace.
She has pledged to keep a primary budget surplus target of 3.3 percent of gross domestic product until net debt falls to 30 percent of GDP in late 2014. It was 41 percent of GDP in September.
The government still expects to hit its primary budget target in 2010, after a large one-off payment by state oil company Petrobras helped it partially offset a ramp-up in public spending this year. Still, it may only meet its target by excluding spending on its infrastructure program or adopting other unusual accounting methods.
STATE ROLE IN ECONOMY
Rousseff favors a strong state role in strategic areas, such as banking, petroleum and energy, but she insists private companies in those sectors would not be crowded out.
She also pledges to promote government efficiency and a meritocracy while cutting red tape.
A former energy and mining minister under Lula, Rousseff may also increase state intervention in the mining sector, which could create risks for iron-ore giant Vale. Lula’s government has put pressure on the world’s biggest iron-ore producer to create more jobs in Brazil by investing in steel production.
Rousseff is likely to push on with efforts to boost access to broadband Internet services among low-income households through the revived state-run Telebras, whose assets had been privatized in the 1990s. Some industry leaders have said the private sector could be harmed by the plan.
The president-elect has said she would also make it easier to establish small businesses, though she has not detailed how she would make that happen.
Rousseff said she would maintain the central bank’s operational autonomy and the status of its president as a cabinet minister. Brazil’s central bank follows an inflation-targeting regime that investors say is crucial for price stability in the country.
Rousseff praised the central bank for successfully steering Brazil through the global credit crunch that began in 2008.
Rousseff has made an overhaul of Brazil’s complicated tax system a top priority and could push a series of microeconomic reforms to improve the investment climate.
Her proposals include capital investment and payroll tax breaks and harmonizing tax levels among states. She would set up a fund to offset some states’ revenue shortfalls -- an obstacle that had undermined previous reform efforts by Lula.
Rousseff favors a piecemeal reform of the costly pension system that would raise more money to finance the growing social-security deficit and alter some retirement rules.
She has skirted proposals by labor unions to reduce the work week to 40 hours from 44, but she has also ruled out cutting generous labor benefits, which business leaders say erode the competitiveness of Brazil’s economy by making it costly to hire and fire workers.
Rousseff has said that until Brazil’s debt burden falls considerably, the central bank will have to focus exclusively on inflation, rather than looking at the broader economy, including job growth.
Rousseff has said she wants to bring down Brazil’s interest rates, which are among the world’s highest and are a major factor keeping the currency strong. But she is not expected to strong-arm the central bank into lower rates.
Rousseff fully supports the Lula government’s drive to heighten government control over massive newfound oil reserves, and she helped draft the proposal. The move includes the creation of a new state company to manage the reserves, a requirement that state-owned oil company Petrobras operate every field, and a new fund to invest oil revenue into education, health and other development projects.
She is likely to continue to push Petrobras to align its goals with government policy, which could result in a more limited role for foreign companies in the sector.
Rousseff has ruled out targeting a specific exchange rate for Brazil’s currency, which is trading near a two-year high and hurting exporters.
The Lula administration has taken steps to limit the flow of foreign capital into Brazilian financial markets in a bid to curb the real, but so far has had little success in reversing the currency’s rally.
Rousseff has blamed the volatility in Brazil’s foreign exchange market on the economic crisis in rich nations, which is driving investors to pour money into emerging markets in search of high returns.
She supported the decision to raise taxes on the purchase of Brazilian bonds by foreign investors but has not offered any specifics on how she would seek to address the currency issue.
Rousseff favors continuity of Lula’s foreign policy objectives, including regional integration in Latin America and a greater say for developing nations in the World Bank and the International Monetary Fund.
She has proposed to create a bi-national energy company with Bolivia. But given her priority on domestic issues and her lower international profile, she is less likely to continue Lula’s high-profile diplomacy.
Edited by Todd Benson and Kieran Murray
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