Banker to be named Brazil finance minister -newspapers – Reuters


(Adds sources saying announcement to be made as of Wednesday)

By Alonso Soto

BRASILIA Nov 21 (Reuters) – Brazilian President Dilma
Rousseff will name banker Joaquim Levy as her new finance
minister, three leading newspapers reported on Friday, signaling
a shift toward more market-friendly policies that could breathe
life into a stagnant economy.

Levy’s appointment was reported by Valor Economico, Folha de
S.Paulo and Estado de S.Paulo, which cited unnamed sources.
Reuters was not immediately able to confirm the reports and the
presidential palace declined to comment on them.

Rousseff will announce her finance minister and other
cabinet members as of Wednesday, government sources told
Reuters.

Levy, head of the asset management arm of Brazil’s second
largest private bank Bradesco SA and a former
government treasury secretary, emerged as a candidate for the
job on Thursday after Bradesco’s chief executive reportedly
turned it down.

The University of Chicago-trained economist is a proven
fiscal hawk who helped Brazil obtain its investment grade
rating while he was treasury chief between 2003 and 2006 by
checking spending and overhauling its debt structure.

Many investors have expressed hope that Levy will pull off
something similar this time if his appointment is confirmed.
They have said hefty budget cuts are needed to restore
confidence in an economy that has been stagnant for four years.

It is unclear to what extent Rousseff, also a trained
economist who relishes making financial decisions, will loosen
her grip on the economy after winning a second term last month.

Markets are likely to embrace Levy, and they extended gains
on Friday after the reports, with the Bovespa closing up
5 percent to its highest level in a month.

“By choosing Levy (Rousseff) is trying to regain
credibility, which is crucial in this game,” said Alberto Ramos,
a Goldman Sachs economist who knew Levy at the University of
Chicago and later at the International Monetary Fund.

“It is important to have that voice of reason in the team,
but at the end of the day it continues to be Dilma Rousseff’s
government,” Ramos said.

Current Finance Minister Guido Mantega, whose credibility
waned in recent years as his often-rosy forecasts failed to
prove accurate, is expected to leave office when Rousseff’s
second term starts on Jan. 1.

The nomination of a banker is likely to generate some
opposition in Rousseff’s leftist Workers’ Party, especially
after she spent her re-election campaign lambasting bankers.

Yet such concerns appear to be outweighed by the threat of
another recession in 2015, plus falling investor confidence due
to a multi-billion dollar corruption scandal at state-run oil
company Petrobras.

Levy “is a fiscal conservative and that will surely create
some tensions in the party,” a senior ruling party lawmaker said
on Friday, without confirming the appointment.

“But (Rousseff’s) message is clear as day; her government
will turn toward orthodoxy to rescue the economy,” the lawmaker
said.

Aides said Rousseff delayed the decision for weeks as she
was torn between a market-friendly pick like Levy and someone
who would represent a more status-quo approach. But they said
the scandal at Petrobras, plus strong urging from her
predecessor Luiz Inacio Lula da Silva, convinced her to opt for
a market-friendly name.

Levy, who worked as an IMF researcher, knows Brazil’s fiscal
policy like few others.

Analysts believe he will push for more transparency in
public accounts and more credible, multi-year fiscal targets to
raise the government’s savings and help the central bank battle
above-target inflation.

Since Rousseff took office in 2011 the economy has grown an
average of less than 2 percent per year and is expected to
barely expand this year and next. That is a far cry from the
better than 4 percent annual growth rates of the previous
decade, when Brazil was a Wall Street favorite.

(Additional reporting by Jeferson Ribeiro, writing by Alonso
Soto; Editing by Brian Winter, Andrew Hay, Toni Reinhold)

Banker to be named Brazil finance minister -newspapers – Reuters}

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