Dilma Rousseff becomes first woman to lead Brazil

Dilma Rousseff became Brazil's first female president on Saturday and promised to build on an unprecedented run of economic success achieved by her popular predecessor and mentor, Luiz Inacio Lula da Silva.

Thousands of admirers braved a driving rain and cheered as Rousseff rode to her inauguration in a 1953 Rolls Royce flanked by an all-female security detail. The former guerrilla, who evolved over time into a pragmatic civil servant, vowed during her inaugural speech to focus on tax reform and other steps she said should help eradicate extreme poverty in the next decade.

"Many things have improved in Brazil, but this is just the beginning of a new era," said Rousseff, who briefly choked up with emotion during the address to Congress.

"My promise is ... to honor women, to protect the most fragile, and to govern for all."

Rousseff, 63, inherits an economy that still faces many challenges - but is growing at a pace that would make most of the rest of the world green with envy.

More than 20 million Brazilians were lifted out of poverty during Lula's eight years in office, thanks largely to his social welfare policies and stable economic management that made Brazil a darling among Wall Street investors.

The coming decade also looks bright, with massive, newly discovered offshore oil reserves due to be exploited and the World Cup and Olympics to be hosted here.

Among the tasks Rousseff must address are an overvalued currency that is hurting industry, rampant public spending that is fueling inflation, and notorious bureaucracy that stifles investment and discourages innovation.

Perhaps the biggest challenge will be living up to the example set by Lula, a former metalworkers' union leader who leaves office with an approval rating of 87% and near folk-hero status - especially among the poor.

"I'm here to thank Lula for all he's done. If Dilma can do half of that, I'll be happy," said Izabel Rosales Figuereido, who traveled from the western state of Mato Grosso do Sul to attend Rousseff's inauguration.

Rousseff vowed on Saturday that "Lula will remain with us" - signaling that he is likely to play an important advisory role to her government.

Lula essentially hand-picked Rousseff, his former chief of staff, to be his successor. The career civil servant had never run for office before, and she remains somewhat of a mystery to many Brazilians, but her promise to continue Lula's policies was enough to get her elected in October by a wide margin.

An unlikely rise to power Rousseff now leads a country that, just four decades ago, persecuted her as an enemy of the state.

The daughter of a Bulgarian immigrant, Rousseff was active in the resistance to Brazil's 1964-85 dictatorship. She was jailed on subversion charges for three years and tortured by her military captors.

Several of her former cellmates were present at her inauguration on Saturday.

After democracy returned, Rousseff held a series of mid-level government jobs and acquired a reputation as a shrewd technocrat who is unafraid to call out underlings for shoddy work or incompetence, but often lacks a common touch when dealing with voters.

More recently, she overcame lymphoma in 2009 and she briefly wore a wig as she underwent chemotherapy. Her doctors have given her a clean bill of health.      

After the swearing-in, the twice-divorced Rousseff rode through the streets of Brasilia in the Rolls Royce with the roof down, and her daughter by her side. Nine of her 37 ministers will be women - a record for Brazil.

In her inaugural speech, Rousseff called for reform of Brazil's onerous and complex tax system. She also called inflation a "plague," vowing to keep prices under control, and referred the new oil reserves as "our passport to the future."

Lula attempted several tax reforms with only limited success and pushing the changes through Rousseff's 10-party coalition in Congress will be easier said than done.

"The question is whether she has the courage and support to stand up to vested interests," said Pedro Simon, senator for the PMDB, the largest party in Rousseff's coalition. "There's already an army of scoundrels wanting the victory spoiled."

Given the many pressing demands at home, she is likely to take a lower international profile and avoid courting controversy, like Lula did when he angered Washington with mediation efforts over Iran's nuclear programme.