A former treasury secretary was named by Brazilian President Dilma Rousseff with a standing as a fiscal conservative as finance minister on Thursday in a move that is broadly viewed as charting a new course for the flagging market and soothing jittery financial markets in Brazil.
The appointee, Joaquim Levy, is a University of Chicago-trained economist and top executive with the Brazilian bank Bradesco. The appointee helped shore up investor confidence in Brazil as an associate of the economical team of mentor and Rousseff’s predecessor, former President Luiz Inacio Lula da Silva. During his 2003-2006 tenure as treasury secretary, Levy helped pave the way toward increase by reducing debt.
The appointee was also the section of Silva’s predecessor, Fernando Henrique Cardoso’s economic team.
Nicknamed by co-workers “Scissorhands” for his penchant for slashing prices, Levy has a reputation as a hard worker with an obstinate streak. Based on local news reports, during his tenure as treasury secretary Levy and Rousseff, then minister of mines and energy, clashed so viciously that she threw him out of her office.
The appointment of the 53-year old Levy is viewed as an indicator of Rousseff’s readiness to undertake the significant reforms found as crucial to jumpstart the poor market.
In a news conference where Levy was flanked by two other appointees? Nelson Barbosa, who was named minister of preparation, and Alexandre Tombini? Levy stated that lowering public debt will be a top priority and added any measures executed would be “without great surprises.”
Levy has presided over four years of lackluster increase as Chinese demand for Brazilian commodities including soy and iron ore flagged and will succeed Guido Mantega, who was named to the place in 2006 under Silva. Brazil’s GDP growth peaked at 7.5 percent in 2010, but the nation fell into technical downturn in August.
During her reelection campaign, Rousseff said Mantega wouldn’t stay on for her second period. Still, investors overwhelmingly favored Rousseff’s competition, the centrist Aecio Neves, and Brazil’s money and Bovespa stock market index have dropped since Rousseff’s small Oct. 26 success.
In Thursday’s statement, Rousseff’s office said Mantega would stay through the ending of the transition interval in his job.
Alex Augustin, chief economist for the Sao Paulo-based credit rating agency Austin Rating, hailed Levy’s appointment as “exceptionally favorable.”
“Sadly Brazil’s credibility among investors and businessmen has deteriorated over the past couple of years,” he said. “But the appointment of someone like Levy with an orthodox and down-to-earth profile who worked in the government in 2004 and enhanced the nation’s public debt profile should begin shifting things.”
However, Augustin said if Levy neglects to present quickly reforms investors could sour on him.
“They’ll need to see whether he is going to have the autonomy, the freedom, to run the ministry, and when he’ll have the capacity to make the necessary fiscal adjustments to handle the financial deficit by increasing taxes and restraining government spending,” Augustin said.
Statement of the new fiscal team had been anticipated and local news media reported the postponement was due in part to an internal dispute within Rousseff’s Workers’ Party. Some party officials were said to be fought to the appointment of a banker viewed as a champion of conservative fiscal policy.
Rousseff, a former Marxist guerrilla who was tortured under the military dictatorship of the country’s, is also regarded as a potential barrier to a significant economical overhaul. Herself a trained economist, Rousseff is considered to be greatly involved in managing economic policy. She’s to be sworn in for her second four-year period in office on Jan. 1.