Dilma travels to Davos to seek reconciliation with the market

Seeking reconciliation with the market, President Dilma Rousseff intends to make speeches focusing on three subjects during her participation at the World Economic Forum. She has already defined the three most important points of her interventions in Davos, in front of the business elite of the planet, to placate criticisms of foreign investors. The defense of fiscal policy, inflation control, and growth potential of the Brazilian economy – probably in that order – should set the tone of her speeches.

This weekend, Dilma wants to devote herself personally to prepare the speeches. In addition to a special forum session, the President prepares for a meeting with senior international executives on Friday. In the so called Business Interaction Group on Brazil, with capacity for 70 participants, more than 90 executives had requested registration until mid this week. There will be a time for questions to Dilma.

More important than the message content, the President rely on the symbolism of her first trip to Davos to ensure a lasting truce with the market. Since the successful auction of airports and highways in the last two months of last year, the Presidential Palace believes that they managed to restore a positive environment with the national market.

However, Dilma recognizes that they have not being able to resume a positive agenda with the financial sector – in the country or abroad. So she is convinced that she clearly needs to address the major questions of the market: fiscal policy and the strength of inflation. In defense of primary surplus, she wants to assign the decline of results in recent years to exemptions for industry, noting that it is not a collection problem and stressing that Brazil is one of the G-20 with better indicators. Regarding inflation, the President should reiterate the autonomy of the Central Bank to raise interest rates.

Dilma’s assistants suggested that there should be no new commitment or number in relation to primary surplus and the estimated inflation in 2014, since they understand that it could generate unnecessary promises during election campaign. Therefore, they advocate a more general tone when mentioning these indicators.
In an attempt to counter the pessimism surrounding the low growth of the economy, which has been feeding critics of the presence of Brazil among the BRICs, Dilma intends to discuss the positive impact of infrastructure, oil and gas auctioning for the GDP in the coming years. For her, the auction Libra’s megafield was really a success, contrary to the moderate assessment of many analysts.

In a recent study, the Ministry of Finance estimated in US$ 34 billion the value of investments contracted in grants made in 2013. With these references, the President seeks to attract the interest of foreign entrepreneurs in the next concessions, such as railroads.

Dilma will take with her an extensive entourage. At least five ministers should accompany her to Switzerland: Guido Mantega (Finance), Fernando Pimentel (Development), Luiz Alberto Figueiredo (Foreign Affairs), and Aldo Rebelo (Sports), as well as the chairman of the Central Bank, Alexandre Tombini. The presidents of BNDES, Luciano Coutinho, and the president of Petrobras, Graça Foster, are also part of the delegation. They have been frequently present at Davos in recent years, and they will participate in breakout sessions in their areas of expertise. However, Tombini has been the principal adviser to Dilma in preparing her speeches.

Advisors ensure that the absence of the President on the forum during her first three years in office was not out of snobbery or lack of interest. However, one of her assistants recognizes: In previous years, Davos was who would earn more with her presence. Now, it is her who earns more with her presence in Davos. A convincing defense of Brazilian economic policy, as it has been stated by Palácio do Planalto, would be able to reverse the distrust of the market.

The governor of Pernambuco, Eduardo Campos (PSB), was considering going to Davos, but he will probably give up. His wife is eight months pregnant and he claims personal reasons for avoiding traveling abroad in the moment. Despite recent speculation, Senator Aécio Neves (PSDB-MG) never seriously planned to go to the forum, according to his office. His presence is discarded.

The governor of Minas Gerais, Antonio Anastasia (PSDB), has a planned participation in events with senior executives, including the meeting that Rousseff will have with business leaders on Friday. He will also meet with CEOs of companies which already invest or plan to invest in the State, such as GE, Dow Chemical, and Pepsico.