MercoPress. South Atlantic News Agency

President-elect Rousseff names business-friendly transition team

Antonio Palocci: no problem in finding the budget savings needed

Brazilian President-elect Dilma Rousseff named a market-friendly transition team on Monday as she prepares to take the helm of a booming economy threatened by heavy government spending and an overvalued currency.

Rousseff, who based her campaign on extending the legacy of President Lula da Silva, won her first election on Sunday as Brazilians voted overwhelmingly for continuity.

After a bitter campaign in which she offered few specifics on her policy plans, Rousseff chose a seven-member transition team that draws heavily from the moderate wing of her left-leaning Workers' Party.

Chief among them is Antonio Palocci, a well-regarded former finance minister under Lula da Silva who is popular with Wall Street and is likely to take a prominent post in Rousseff's administration, potentially chief of staff.

Others include Jose Eduardo Dutra, the president of the Workers' Party and a former chief executive of state oil giant Petrobras; Fernando Pimentel, a former mayor of Belo Horizonte; and Marco Aurelio Garcia, Lula da Silva's foreign policy adviser.

Rousseff spent most of Monday meeting with advisers and talking to foreign heads of state by telephone at her home in Brasilia.

Financial markets reacted positively to her acceptance speech in which she pledged to rein in government spending while maintaining the social welfare policies under Lula da Silva that lifted millions out of poverty and millions more into middle class.

The possibility for greater fiscal discipline led investors to bet on a medium-term decline in interest rates, which are among the highest in the world and one of the main causes of the currency's constant appreciation.

Brazil's Bovespa stock index rose more than 1%.

Palocci, the face of fiscal austerity in Lula da Silva's first term, suggested the budget could be adjusted to slow spending.

“There's no fiscal crisis in Brazil today ... but we have no problem in finding the savings that Brazil needs to keep its debt projections on a downward trend,” Palocci said in an interview with Folha de Sao Paulo newspaper.

Still, analysts worry Rousseff is not sufficiently committed to broader changes, such as an overhaul of the nation's bloated social security system and its suffocating bureaucracy that are crucial for long-term growth.

Rousseff must now emerge from Lula's shadow and overcome the perception, still held by some Brazilians that she is an inexperienced acolyte with little experience of her own.

The headline in Monday's O Estado de Sao Paulo newspaper was simply: “Lula's victory.”

At Lula da Silva's suggestion, Rousseff will travel with the president to the G20 summit in South Korea on November 10-12, where the leaders of the world's top economies will discuss currency tensions that are high on the agenda in Brazil.

One of Rousseff's first challenges when she takes office on New Year's day will be to address Brazil's hard-charging currency, which is trading near a two-year high and damaging exporters.

Rousseff, 62, pledged in her victory speech to extend a “new era of prosperity” that has lifted 20 million Brazilians into the middle class and thrust the country into the BRIC club of emerging economic powers alongside Russia, India and China.

Dilma Rousseff took 56% of the vote. Her rival, Jose Serra of the centrist PSDB party, had 44%.

Rousseff also anticipated she will continue to push Lula da Silva's flagship initiatives, including reforms to give the state a greater role in developing vast new oil wealth and ambitious infrastructure plans as Brazil prepares to host the 2014 World Cup and the Olympics two years later.