Bolsonaro faces multiple headwinds

Brazilian President Jair Bolsonaro faces headwinds that threaten to undermine key fiscal reforms seeking to boost Latin America's biggest economy.

Tens of thousands of students marched through Brazil's major cities on Wednesday, protesting against the government's planned education budget cuts. It was the biggest demonstration since the rightwing president took office in January. 

“They [students] are useful idiots, imbeciles who are being used as the maneuvering mass of a smart little minority that makes up the nucleus of many federal universities in Brazil,” Bolsonaro told reporters in the US state of Texas, where he traveled to speak at an event.

In the same day of the protest, the Brazilian government saw worrisome signs on the economic front.

The central bank’s economic activity index, a GDP proxy known as IBC-Br, contracted 0.68% year-on-year in the January-March period. The negative figure shows that Bolsonaro has so far failed to revive the country's weak economy.

Economists surveyed weekly by the central bank have gradually reduced their 2019 growth forecast since Bolsonaro took office in January.

After expanding 1.1% in 2018, the economy is projected to grow around 1.45% this year, according to the survey with 100 economists.

BOLSONARO’S SON INVESTIGATED

Meanwhile, prosecutors are looking into possible money laundering through real estate assets by Flávio Bolsonaro, one of the president's sons. 

Earlier this year, the government's financial supervisory council (COAF) detected suspicious cash transfers from Fabrício Queiroz, a former adviser to Flávio Bolsonaro.

The probe started after prosecutors demanded details of all financial transactions by people linked to Rio de Janeiro's chamber of deputies, as several legislators in the state are under investigation.

Flávio Bolsonaro has been a Rio de Janeiro lawmaker since 2003, and in the October general elections he won a bid to become a member of the country's senate. He has denied any wrongdoing.

Bolsonaro was elected in October 2018 by promising economic measures to boost growth and fight against corruption. 

PENSION REFORM

Even with little support in congress, Bolsonaro’s administration intends to move forward with several reforms, including a key overhaul of the bloated pension system to fix the fiscal imbalance. 

"We know the size of the fiscal and social crisis and we will not evade our responsibility,’ said lower house speaker Rodrigo Maia, who holds the keys to the reform's approval.

Maia said congress will approve the pension reform despite the government's inability to arrange and coordinate support.

CONSPIRING ALLIES?

The Bolsonaro administration is also sending mixed signals to its close political allies.

Some key people linked to the administration, including another one of the president's sons, Carlos Bolsonaro, criticized high-ranking army officials, saying there is a conspiracy to promote the impeachment of Bolsonaro in order to elevate his VP, retired army general Hamilton Mourão.

Bolsonaro, a former army captain, was elected with a strong support from the armed forces.