Brazil's Temer eyes pro-business plan but has scant room for major reforms

jueves 31 de marzo de 2016 15:38 GYT

By Anthony Boadle and Alonso Soto

BRASILIA, March 31 (Reuters) - Vice President Michel Temer is quietly assembling a team of respected economists to revive confidence in Brazil's battered economy with cautious spending cuts and privatizations should leftist President Dilma Rousseff be impeached, insiders say.

Temer could take power as soon as May if the lower house of Congress approves Rousseff's impeachment but party insiders warn the softly-spoken 75-year-old faces a daunting array of obstacles to pursuing the deeper reforms they say are needed to rebalance Latin America's largest economy.

Brazil's worst recession in decades restricts the room for sharp spending cuts to curb a vast budget deficit and differences within Temer's Brazilian Democratic Movement Party (PMDB) will complicate efforts to build a consensus for change on sensitive issues like pension and welfare reform.

"The country is in chaos. It is broke and Brazilians are fed up with the political establishment," said veteran PMDB lawmaker Jarbas Vasconcelos. "We can only change this with a wide coalition. Temer knows it has to include respected figures."

The PMDB, Brazil's largest party, is a fractious grouping without any clear ideology. It has not fielded a presidential candidate for two decades and has instead used its role as coalition partner to sweep up lucrative government positions.

To complicate matters, several senior PMDB figures are embroiled in Brazil's biggest ever corruption investigation and Temer himself could be ousted if the Supreme Electoral Court finds graft money helped fund the 2014 election campaign when he was Rousseff's running mate.

Aware of the embittered political environment they would inherit if Rousseff is ousted, PMDB insiders close to Temer say he will try to build support in Congress for careful cuts to spending and to red tape that hurts businesses as well as the sale of subsidiaries at state oil firm Petrobras, which lies at the center of the vast corruption scandal.

PMDB officials are considering former central bankers Henrique Meirelles and Arminio Fraga, both widely respected on Wall Street, to lead the future economic team as finance minister, according to a party leader and a political consultant both close to Temer.   Continuación...