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President Temer pushes reform on Brazil's agenda in spite of political crisis

Bloomberg/Christopher Goodney

Temer calls for electoral court to make a swift decision. President is accused of obstruction of justice, corruption

Petroleumworld 05 30 2017

Brazil's President Michel Temer said he has the full conditions to govern and pass reforms as a political crisis threatens to derail his government's agenda, jeopardizing a fragile economy.

"No party has told me they are not going to support reforms," Temer said in an interview with a group of foreign journalists, including Bloomberg, in Sao Paulo. "Resolving the pension deficit is fundamental." Policy makers were close to securing the votes needed to pass a crucial but unpopular pension overhaul in the lower house before the latest scandal broke.

Less than two weeks ago, allegations that President Michel Temer sought to obstruct justice and turned a blind eye to corruption roiled Brazil, prompting a market sell-off. Since then, the government has sought to project an image of business as usual. Amid significant threatstto his mandate, and widespread media speculation about a possible successor , the president gave numerous interviews on Monday insisting he is not on his way out. Cabinet ministers and government allies have given strong support for the continuation of Temer's reform agenda while taking a more cautious view of the president's destiny.

Earlier in the day Finance Minister Henrique Meirelles said that now was the right time to push through an overhaul of Brazil's pension system and that he expected a vote in the lower house of Congress by mid-June. Asked about the president's position, Meirelles said that he was working with the hypothesis that Temer would stay in power.

In speeches broadcast on national television and social media, Temer has repeatedly denied all accusations of wrongdoing and said he will not resign. The president has tried to maintain a normal agenda, announcing ministerial changes and visiting regions of the country affected by heavy rains over the weekend.

Electoral Court Ruling

The most direct threat to his mandate could come as early as next week. On June 6 Brazil's top electoral court, the TSE, is due to resume its judgment on the 2014 election campaign, when Temer ran as Dilma Rousseff's vice-presidential candidate. The court is currently assessing whether to invalidate the results on the basis it was financed with illegal campaign donations. An adverse ruling could see Temer stripped of the presidency.

"The TSE judgement tends to create a certain amount of instability," the president said. "The best solution would be if the TSE judged the case in three or four days."

Temer's team is working on a scenario whereby one of the judges would request more time to analyze the case, or else hold Rousseff solely responsible for any wrongdoing while exonerating Temer, according to one presidential aide .

The real gained slightly on Monday, adding to the currency's modest recovery in the wake of a dramatic sell-off when the allegations against the president were made public. The Sao Paulo stock index fell 324 points in trading on Monday.

Story by Vivianne Rodrigues from Bloomberg.

bloomberg.com 05 29 2017

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