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Brazil: Investors confident despite political scandals

Lula remains favourite for second term

 Lula: under pressure

Most Brazilians are transfixed by their country's political crises but international investors are rather more sanguine. The majority remain bullish about Brazil's prospects, despite scandals that have engulfed senior members of the governing Workers Party (PT). Four of president Luiz Inacio Lula da Silva's closest aides, including Jose Genoino, one of the PT's founders, have resigned after allegations that they bribed members of congress in return for votes. One party worker was even found with $100,000 in dollar bills stuffed down his underpants. The president has responded by reshuffling his cabinet and appointing three members from the centrist Democratic Movement party, so weakening the PT party's influence within the governing coalition.

Although none of these scandals directly implicates Lula (at least for the time being), they have emerged at exactly the wrong time for him. Next year there is a presidential election and although Lula remains the favourite to win a second term in office, he might find his mandate is restricted if the allegations continue. That, in turn, could limit his reform agenda.

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