The Political Situation in Brazil; a guide for Brazilian property owners
The UK is not the only country preparing itself for a change of government this year. Over in Brazil political parties are also gearing up for a presidential election campaign.
However, unlike the UK, Brazil is guaranteed a change of leader, as the country’s electoral system means the current president Lula da Silva is unable to seek a second term.
Inevitably there will be much political wrangling before Brazil heads to the polls in October but the election serves to highlight one of the advantages of Brazil as an investment destination.
A stable political situation is an advantage for any investor, which is good news for Brazilian property owners.
How does Brazil’s government work?
In Brazil executive power is granted to the president, who is assisted by the ministers of state. Both the president and the vice president are elected to serve a four-year term and are only allowed to stay in power for a total of eight years.
Citizens of Brazil are granted universal suffrage and voting is mandatory for anyone between the ages of 18 -70, providing they are literate.
Those running in an election are required to be registered with a political party. Due to Brazil’s vast size, ballots are registered electronically so those living in Brazilian property within remote regions are able to vote.
Who is running in the election?
Two main front runners have already been identified in the election, despite the poll not taking place until much later in the year.
One of these is Dilma Rousseff, President Lula’s chief of staff. Ms Rousseff resigned from her post at the beginning of April to begin her campaign and will be representing the Workers Party (PT).
She was one of nine members to step down from the cabinet to run and if elected will become the country’s first female president.
Jose Serra, representing the Brazilian Social Democracy Party, is the second front runner. The former governor of Sao Paulo was beaten by President Lula when he ran against him in 2002.
Reuters reports that the former Ceara state governor Ciro Gomes and ex-environment minister Marina Silva are both running, although neither are polling as highly as Ms Rousseff or Mr Serra.
However, Brazilian property owners should be reassured by the fact that neither of the favoured candidates is expected to make significant changes to the policies of President Lula, which, according to the BBC helped the country maintain economic stability.
What will the result mean for Brazilian property owners?
In terms of policy which may affect Brazilian property owners, the left wing PT is likely to support greater state involvement within the economy.
The Financial Times reports that President Lula said that people may try to brand Ms Rousseff as a statist.
"Obviously you won’t want to nationalise tyre repair shops, bars and pizzerias. But [about] things that are strategic, that aren’t working and need to be put to work better, we must not be afraid of taking decisions that are important for our country," he explained.
According to Reuters, Ms Rousseff’s policies would include a reduction in state bureaucracy and a possible reform of the tax system.
Mr Serra is likely to make spending cuts within the government to enable interest rate and tax reductions. It is also probable that he will favour private businesses over state enterprises, Reuters reports.
Brazilian property owners may also be pleased to hear that Mr Serra believes the country’s currency, the reais, is overvalued and he could take measures to weaken it.
This means exchange rates could improve for those looking to buy property in Brazil.
