by Moises AVILA
Brazilian President Dilma Rousseff named pro-market bank executive Joaquim Levy to be her new finance minister Thursday as her government looks to steer the economy out of recession.
Levy, a University of Chicago-trained economist, is a popular choice in the financial world, where Rousseff’s management of the world’s seventh-largest economy has been widely attacked.
At a press conference where the president’s new economic team was announced — with central bank chief Alexandre Tombini keeping his job and economist Nelson Barbosa taking over the planning ministry — Levy vowed to whip the government’s books into shape by boosting the primary surplus.
“We’re going to work with a primary surplus target of 1.2 percent of GDP in 2015, while for 2016 and 2017 the (target) will be no less than two percent,” he said.
“This target is fundamental to reactivate growth.”
A primary surplus means the government is spending less than its overall revenue, excluding interest payments on its debt.
Brazil formerly hewed to a target of 3.1 percent of GDP, but that was slashed to 1.9 percent in 2013. As of September, the government had only saved 0.61 percent of GDP this year.
– Minister ‘Scissorhands’ –
Levy, 53, was previously chief executive officer of Bradesco Asset Management (Bram), part of Brazil’s second-largest private bank.
He has also worked with the International Monetary Fund and the European Central Bank.
Nicknamed “Scissorhands” for his steely budgetary management, he was described by Brazilian newspaper Folha de Sao Paulo as “addicted to work, frank almost to the point of rudeness” and “as stubborn as Dilma,” a former leftist guerrilla known for her toughness.
Levy takes over the finance ministry from Guido Mantega, in the post for eight years.
“He is a big name. He is an excellent name. I see him as austere, rigorous. This could enable us to send out a signal that the finance ministry is embarking on fiscal adjustments” to win back the confidence of the markets, TAG Investments economist Andre Leite told AFP.
Levy served as treasury secretary under Rousseff’s predecessor and mentor Luiz Inacio Lula da Silva, a former union leader who saw him as underscoring his own market credentials.
“His trajectory, including at the heart of the first Lula government, inspires confidence,” said Margarita Gutierrez, professor of macroeconomics at Rio University.
“He is a technician… a credible person who will win over the confidence of the markets,” Gutierrez told AFP.
Lula — who remains widely popular for presiding over strong economic growth during his eight-year administration, and is reportedly considering a new presidential run in four years — was instrumental in Rousseff’s choice of a new treasury team, according to Brazilian media reports.
Rousseff is deeply unpopular with the business community and markets, not least owing to heavy government intervention in economic policy.
She narrowly won re-election last month for a new four-year term despite presiding over a recession in the first half of the year.
Moreover, her reshuffle comes as her government is mired in a huge corruption scandal at state-owned oil giant Petrobras that has already led to the arrests of a clutch of top businessmen amid claims that dozens of politicians, chiefly Rousseff allies, received massive kickbacks on contracts.
– Pledge to tackle inflation –
Like Levy, Tombini, the central bank chief, is considered close to financiers but came in for criticism during Rousseff’s first term for too easily ceding to government pressure.
Tombini, 50, vowed Thursday to tackle inflation, which has hovered stubbornly over the central bank’s target ceiling of 6.5 percent.
“We will not be complacent on inflation,” he told journalists.
Barbosa, 45, rounds out the new economic team as minister of planning, a post seen as close to the presidency.
A former deputy finance minister, he quit his previous post last year after reputedly clashing with Mantega.
Other cabinet posts including industry and agriculture are likely to be filled later, probably next month.
Rousseff is reportedly considering for the industry portfolio senator and businessman Armando Monteiro Neto, who formerly chaired the influential National Confederation of Industry.
Brazilian industry is currently in crisis amid sagging investment and poor productivity and due to contract by more than two percent this year.
Despite the naming of the pro-market economic team, the country’s stocks closed down on Thursday. Sao Paulo’s benchmark Ibovespa index fell 0.68 percent to 54,721 points.
The real lost 0.91 percent to close at 2.53 to the dollar.
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