Eduardo Cunha, the speaker of the lower house of Brazil’s parliament, said on Wednesday that impeachment proceedings have been opened against President Dilma Rousseff.
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The political uncertainty comes as Brazil heads into an even deeper recession, with rising inflation and employment, a currency one third down over the year, and turmoil over a giant corruption scandal centred on state oil major Petrobras.
When news came early on Wednesday that the committee members from the PT, Rousseff’s party, would be voting to recommend Cunha’s removal from the speakership, the stalemate broke down. The move also threatens to paralyze Rousseff’s economic agenda as she focuses on saving her presidency rather than averting further sovereign credit downgrades and reviving growth.
Despite her re-election past year, Rousseff’s second term has been marred by a corruption scandal involving her own Workers’ Party that has sent her approval rating plummeting and provoked mass protests. The financial accusations reflect a court decision that the Rousseff administration’s accounting practices in 2014 violated the law.
The party’s deputy leader in the lower house, Henrique Fontana, said Cunha’s actions represent a break with democracy.
The Brazilian economy contracted 1.7 percent in the third quarter of the year over the previous quarter, signalling a prolonged recession, according to figures released Tuesday.
There are accusations, including from the country’s top audit court, that the president authorized backpedaling to ensure social spending was maintained ahead of last year’s presidential elections, and that the practice has continued into 2015.
Dec 3 Emerging market stocks extended losses on Thursday after the Federal Reserve chief reinforced the case for an interest rate hike while Brazilian assets overseas gained as lawmakers started impeachment proceedings against President Dilma Rousseff.
Dozens of politicians, including Cunha, have been implicated in Brazil’s biggest ever corruption investigation into a price-fixing and political kickback scheme at the state oil company. Rousseff concluded by saying she believes the impeachment process against her will be shelved.
A special cross-party committee will now be set up to analyze the impeachment request before the president can officially respond.
An ethics committee in the House of Deputies is considering whether the full body should vote on the question of Cunha losing his seat.
But with the country in economic crisis and Congress deeply split over Rousseff’s performance, she can not take that support for granted.
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A final (and remotely) if Rousseff has to step down, she would be replaced by Vice president Michel Temer from the PMDB party, senior ally in the ruling coalition.
