21 Dec 2015
Nelson Barbosa new Finance Minister in Brazil
Former Planning mInister Nelson Barbosa replaces Joaquim Levy as Finance Minister in Brazil
Outgoing Finance Minister Joaquim Levy had as his main objective to improve the fiscal accounts of the government by cutting cost and reducing subsidies. This was a difficult agenda in the best of times, and the political standoff primarily due to the Petrobras scandal and the ongoing impeachment process against the president, made it even more difficult to get the needed reforms approved. When the government approved a marginal budget surplus of 0,5% for 2016, it was widely seen as Levy's final defeat. The incoming minister Nelson Barbosa is seen as less strict on fiscal targets, and is therefore expected to have a wider support in congress.
For the markets it was by most seen as bad news for the economy, since most agree that cost cutting, tax increases, and structural reforms is the most adequate route for Brazil to take at this juncture. Since the announcement was made public on Friday, the market volatility has increased, the stock market lost 3% and the currency devaluated 2,6%. The hope is that with a wider support he will be able to get more reforms through than his predecessor.