UFC economico: Brazil’s election: in face-off with Mantega, Fraga disappoints (FT)

Brazil’s election: in face-off with Mantega, Fraga disappointsSamantha Pearson
The Financial Times, 10/10/2014

It was set to be one of the biggest massacres of Brazil’s election. On Thursday night Guido Mantega, finance minister, went head-to-head with Armínio Fraga, the former central banker who will take his job if Aécio Neves wins the presidency this month.
Mantega certainly has some explaining to do. The economy is expected to grow a measly 0.2 per cent this year, according to Brazil’s latest central bank survey. That is less than much of the developed and developing world.
On top of that, 12-month inflation last month came in at 6.75 per cent – above the upper limit of the country’s tolerance band and far above the official target of 4.5 per cent.
So far, Mantega and the PT party have blamed this all on the global financial crisis…
In short, Mantega should have been an easy target.
Fraga certainly had the right arguments. The government needs to fix its economic model, combat inflation, raise investment, attract capital, build credibility and reduce unnecessary lending by the state development bank BNDES, he said. Furthermore, the global financial crisis was *five* years ago, he pointed out. All that is music to investors’ ears.
Even so, he struggled to get the upper hand on Thursday night. While Mantega spoke as a confident politician, drawing on populist and coherent (albeit somewhat flawed) narratives, Fraga largely responded with the cold pragmatism and technical details of a central banker.
As the Brazilian journalist Sérgio Augusto remarked on Twitter: “I had forgotten how bad Armínio Fraga is at interviews and debates. He comes across as everything he isn’t: insecure and false.”
After eight years of Mantega as Brazil’s finance minister, investors and business people may welcome a little cold pragmatism. However, it is not these people Fraga has to convince – the vast majority would have picked Fraga over Mantega anyway. Rather, Fraga and the PSDB party need to find a way to get the economic message across to the average Brazilian and to deconstruct the common belief that what is good for the markets is bad for the people and vice-versa.
After all, this is not just a cordial economic debate: it’s war – the final battle for control over the world’s second-biggest emerging market and the lives of more than 200m people.