| March 4
March 4 Just past the mid-point in her first
term, Brazilian President Dilma Rousseff faces several difficult
economic and political decisions that will define the rest of
1) GO FOR DEEPER TAX REFORM?
Rousseff has acknowledged the need to overhaul Brazil's tax
system, which is considered by the World Bank to be the world's
most complex. But she has so far opted for targeted tax cuts -
in part because she doesn't think she can push a broader reform
through Congress and its 24 squabbling political parties.
Could she reconsider in 2013? Any early signs of another
weak economic performance this year could lead Rousseff to
become more aggressive on the tax front. Alternatively, she
could stick with piecemeal changes, such as the current proposal
to cut the ICMS tax on inter-state commerce and the planned
change to simplify the so-called PIS/Cofins taxes that companies
pay on sales receipts.
2) TIME TO SHUFFLE HER ECONOMIC TEAM?
As the economy continues to struggle, some analysts say
Rousseff's policymaking team has contributed to the problem with
unclear and occasionally contradictory messages about inflation
and other issues. The Eurasia Group, a political risk
consultancy, said this month that Finance Minister Guido Mantega
was "likely" to depart in an upcoming cabinet shuffle as
Rousseff tries to improve her government's credibility with
3) PURSUE NEW TRADE DEALS?
Rousseff has so far failed to advance on negotiations that
could open up Brazil's overwhelmingly closed economy. Despite
its reputation as an exporter of commodities such as soy and
orange juice, trade accounts for less of Brazil's output than
any other major economy in the Western Hemisphere.
There is little evidence to suggest that Rousseff could
embrace a more trade-friendly agenda, especially since Brazil's
manufacturers are struggling to be competitive. But there is no
shortage of interest from the European Union, the United States
and some other South American countries, and Rousseff could
change her stance if the right offer comes along.
4) PUSH NEW MINING CODE?
Brazil's mining code is outdated for a major minerals
exporting nation. Six months after Rousseff took office, Mining
and Energy Minister Edison Lobão said the code would be updated
But two years later Congress is still waiting. Will Rousseff
shake up Brazil's mining framework before the end of her term?
It seems she will. Mining royalties are at rates well below
the rest of the world. The current code sets down concession
rules that are too lenient on extractors and need stiffening for
Brazil to reap the full benefit of its immense resources, the
Mining executives think the code does not need fixing. They
say Brazilian taxes are very high and raising royalties might
push Brazil out of the market. They fear greater state control
could cause more harm than good, which is what some believe
happened when Brazil reformed its oil code.
5) WHO TO PICK AS RUNNING MATE?
Should Rousseff keep Vice President Michel Temer as her
running-mate for her 2014 re-election bid? He is from the PMDB,
Brazil's largest political party, which controls both chambers
of Congress and is her biggest ally in the 17-party government
coalition. Or should she try to enlist Pernambuco Governor
Eduardo Campos for the ticket? His PSB party is the fastest
up-and-coming political force and he seems to be toying with a
presidential bid of his own in 2014, which could complicate
matters for Rousseff. No easy choice, but she still has a year
to ponder her decision.
(Editing by Kieran Murray and Tim Dobbyn)