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Brazilian Finance Minister Joaquim Levy Replaced

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazilian President Dilma Rousseff replaced her Finance Minister, Joaquim Levy, on Friday and appointed Nelson Barbosa, to head the government’s economic team. Until yesterday Barbosa had been the country’s Planning Minister. Local media report that Levy asked to be relieved of his duties after almost a year as head of Brazil’s economy.

Brazil, Levy, Budget, Barbosa
Brazilian Ministers Levy and Barbosa announcing the 2016 budget bill in August, photo by Wilson Dias/Agencia Brasil.

In his first press conference as Finance Minister, Barbosa reiterated that he will maintain the economic strategy set about by him and Levy earlier in the year. “The commitment to fiscal stability stays the same,” he told reporters at the televised news conference.

Analysts say that the substitution will probably lead to greater spending by the federal government, since Barbosa is said to be more lenient about setting surplus targets. Joaquim Levy, on the other hand, struggled to implement his economic plans, receiving criticism from not only outside but also inside the Rousseff Administration. Social movements and sectors of Rousseff’s PT party called for his replacement.

Levy’s discontentment with the direction the economy was heading was well known. Analysts speculate that the final straw was the reduction of the primary surplus in the 2016 budget, approved on Thursday by Congress, from 0.7 percent to 0.5 percent of the GDP.

Although financial agents were already waiting for the announcement the market reacted negatively to the substitution. In the foreign exchange market, the US dollar which had closed at R$3.934/US$ minutes before Rousseff announced Levy’s departure, rose to R$3.982/US$ during after market trading. The São Paulo Stock Exchange (Ibovespa) closed down by 2.98 percent at 43,910 points, the lowest since April of 2009.

Barbosa will be replaced by Valdir Simão, Brazil’s former Comptroller General.

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