By the Blouin News Politics staff

Brazil’s Rousseff faces three crises, with no solutions

by in Americas.

Brazil's President Dilma Rousseff gestures during the welcome ceremony of the the MERCOSUR Summit of Heads of State and Associated States at Itamaraty Palace in Brasilia, Brazil, on July 17, 2015. EVARISTO SA/AFP/Getty Images

Brazil’s President Dilma Rousseff in Brasilia, Brazil, on July 17, 2015. EVARISTO SA/AFP/Getty Images

One major crisis is bad enough, but Brazil’s President Dilma Rousseff is facing three simultaneously, and there’s not much she can do to make things better. After years of a commodities boom, Brazil’s economy is now in a dismal state, and more grim news was released on Wednesday. The chief economist of Brazil’s top bank Itau, Ilan Goldfajn, worsened his forecast for Brazil’s economy, to shrink this year by 2.2% instead of the 1.7% previously predicted, and to contract by 0.2% in 2016 instead of growing 0.3%.

Due to plunging tax revenues from the current recession, on Wednesday the government cut its primary surplus goal for this year from the 66.3 billion reais ($20.16 billion) originally budgeted, equal to 1.1% of GDP, to just 8.7 billion reais ($2.70 billion), or 0.15% of GDP. The government also cut its 2016 primary surplus goal from 2% to 0.7% of GDP to 1.3% for 2017, acknowledging that it was prepared to slash the savings goal further if revenues continue to disappoint. Furthermore, Finance Minister Joaquim Levy said additional budget cuts of nearly 9 billion reais for this year were proof that fiscal belt-tightening is here to stay, despite political pressure to ease the adjustment.

The second crisis Rousseff is facing is personal— her own political survival. As the economy tanks, and the massive corruption scandal at state-run oil firm Petrobras widens (nearing her inner circle of advisers), Rousseff’s approval ratings have fallen to record lows. A CNT/MDA poll released on Tuesday showed that only 7.7% of Brazilians approve of Rousseff’s government. Meanwhile, 84.6% believe she is unable to handle the country’s worst economic downturn in 25 years, and 62.8% think she should be impeached over the Petrobras scandal. Rousseff is also facing a rebellious alliance in Congress that has watered down many of her cost-cutting measures, meaning prolonged agony is in store.

But political support for the government is not the only thing that has dried up. The third crisis is environmental, specifically the worst drought in half a century that is crippling parts of Brazil. Sao Paulo (with 20 million people in its greater metropolitan area) is the financial capital of Brazil—and it has been hit hard over the last year in particular. Normally in July the city’s main water supply would hold more than 155 billion gallons. But that is all gone, forcing the government to tap into emergency reserves and ration access.

Rousseff cannot wave a magic wand and make the economy grow faster, nor can she do anything to bring rain where it’s needed. She could resign, but that wouldn’t solve anything, because the problem of corruption extends through the entire government. In fact, many legislators think she should stay on as President, because she’s an excellent scapegoat for the public’s anger– thus taking some of the heat off of them.

Rousseff has faced long odds before, and prevailed—notably in her hard-fought re-election last October. Constitutionally barred from a third consecutive term, she no longer needs to worry about her electoral future. Rousseff’s only real course now is to buckle down, shrug off the overwhelming criticism, and try to set Brazil on a more sound economic course for the future. It’s a hard, uphill battle, but someone needs to take the flak for the hard decisions.