[ccebook.cn]The World in 2010

The winner in October will inherit a country with a higher international profile and a more successful economy
than when Lula came to power. But there will also be problems, despite a golden period in which tax revenue
grew faster than GDP. In response to the global crisis, Lula’s government both cut taxes and boosted
spending, the kind of policy response that only mature countries can manage without terrifying their creditors.
Rather than the extra spending going on infrastructure, it has been lavished on increases to public-sector
wages and benefits. These entitlements will be hard to cut. Revenue from the recently discovered oilfields off
Brazil’s coast will not come in quickly enough to rescue the new president from this inherited problem.
The rules about how oil money is spent—crucial for the country’s development—will
be pushed through Congress just as the presidential campaign is getting going. This
means that there is a big risk that the debate about the country’s future will be
swamped by private dealmaking, preventing Brazil from making the most of its
“present from God”, as Lula has described the oil.
Both main candidates are well-suited to the tasks they will face. Mr Serra’s time in
the federal government is best remembered for his decision to break the patent on
Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved.
The debate about
the country’s
future will be
swamped by
private
dealmaking
efavirenz, an AIDS drug manufactured by Merck, which has helped Brazil to keep the disease under control.
But some fear that Mr Serra, with an economics doctorate from Cornell University, would disturb the
institutions of economic policymaking that have contributed towards Brazil’s recent success.
Ms Rousseff is also an economist by training, though not such a distinguished one. She is credited with getting
Lula’s presidency functioning again after the mensalão scandal in 2005, when it was revealed that the
government had been managing its business in Congress by paying bribes.
The really remarkable thing, from Brazil’s point of view, is that it has two technocrats competing for the top
job. The country’s hard-won political and economic stability is set to continue, whoever wins.
John Prideaux: São Paulo bureau chief, The Economist
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