By Diana Renee/DPA/Rio de Janeiro

Brazil is coming to the end of a very close, polarised election campaign, but there will be little rest for its next president - be it centre-left incumbent Dilma Rousseff or centre-right Senator Aecio Neves.
Even Rousseff admits in her search for re-election that major changes are needed. She has already announced that Guido Mantega, finance minister of the past eight years, will not be staying on the job even if she is re-elected.
Mantega has said that his exit would not entail “a change in economic policy,” but he also acknowledged that “more intense fiscal efforts” would be required under the new government.
“There will be changes because I think the country is ready for such changes,” Rousseff said. “We are in a position to reduce, for example, some (production) incentives.”
The candidate of the ruling Workers’ Party (PT) noted that, since Brazil’s debt amounts to only 34% of its GDP and there is no exchange rate crisis, “deep fiscal cuts” will not be required.
Neves is not so sure. The candidate of the Party of Brazilian Social Democracy (PSDB) says the current scenario presents a challenge for the government that will take office in January.
“Your government will leave a perverse legacy for the future, with high inflation, low growth and a loss of credibility,” Neves told Rousseff during a televised campaign debate. “Without credibility there is no investment, and without investment there are no jobs.”
He has already said that if elected, he would appoint former Central Bank president Arminio Fraga as his finance minister. Fraga was appointed to lead the Brazilian Central Bank in 1999, when an exchange rate crisis was threatening Brazil’s financial stability.
Fraga and Neves agree that economic policy will need to converge on an annual inflation target of 4.5%, which the country has exceeded for the past three years, and to reactivate growth.
“Inflation massacred this country for many years, and I think there is no room to take risks because it is the poor who lose the most. What is very worrying is the fact that inflation is high and growth is very low, which is a sign of a more serious problem,” Fraga said.
“We are growing two percentage points less than the Latin American average. Investment is very low at 16.5% of GDP. The problem is internal much more than external, because the fiscal situation has lost transparency,” he said.
The Brazilian government has had to cut its growth estimates for 2014 twice: from the original 2.5% to 1.9% and then to 0.9%.
Experts believe, however, that Sunday’s winner ultimately will rely on a combination of fiscal responsibility, floating exchange rates and inflation targets, and that any change is unlikely to be radical.
“That means that we will not return to strong growth, among others because today’s external conditions are negative for that, but it will allow us to grow a bit more than now,” said economist Luiz Roberto Cunha.
“Inflation will also not drop fast, but it will be better,” he said.
Beyond economics, Rousseff or Neves will need to deal with the context of a polarised society.
Rousseff, who lacks the charisma and popularity of her mentor and predecessor Luiz Inacio Lula da Silva, won the first round of voting on October 5 with 41.6% of the votes, to Neves’ 33.5%. Third-placed candidate Marina Silva, who got 21.3% of the votes, has publicly backed Neves for the run-off.
There are deep rifts among Brazil’s 142.8mn registered voters, and the campaign has been bitter even within families and groups of friends.
Rousseff is hoping that the universally acknowledged success of the social programmes the PT has implemented since 2003 will be enough to convince voters to grant her a second term in office.
However, the protests that have shaken Brazil since mid-2013 indicate that the “new middle class” that has been lifted out of poverty with such programmes has major complaints over public services like health, education and transport. Corruption is also drawing many voters away from the PT, as is the stagnating economy.
Neves has vowed to keep and “perfect” the PT’s social programmes, and he has warned that even social progress is at risk if growth continues to stall.
In this context, Brazilian political analyst Josias de Souza makes a strong point.
“The first major task at hand for the next president, whoever it may be, will be to unify the country,” he wrote in the UOL news portal.



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