Brazil’s finance minister replaced amid economic, political upheaval

Fachin, who was named to the top court by Rousseff in June, also argued before his fellow justices that the Senate does not have any authority to review the grounds for impeachment once the Lower House votes to accept the charges by two-thirds of its members.

Brazil debt insurance costs rose and its Eurobond prices fell across the curve on Wednesday after Fitch’s announcement – the second ratings agency after Standard & Poor’s to downgrade its debt to junk status. He said he did not know whether Rousseff had made a decision to replace Levy or if she had candidates for the post. He had threatened before to resign, raising concern that would lead to a credit downgrading. “Political uncertainties prevent any clarity about the economic outlook”, said Candido Bracher, chief executive of Itau BBA, the investment bank unit of Brazil’s largest private bank, as was reported by Reuters.

Analysts said Barbosa is associated with less fiscal discipline and enjoys Rousseff’s support for a lower budget surplus before interest payments.

A controversial secret congressional vote that stacked an impeachment committee with opponents of President Dilma Rousseff was found legitimate yesterday by the Supreme Court justice who suspended proceedings against her last week.

In a further blow to Rousseff and her administration, on Wednesday, Fitch – the credit agency, cut the country’s sovereign debt rating to junk status.

Many investors are now asking themselves whether Barbosa can steer Brazil out of deep recession when Levy, an experienced, University of Chicago-trained economist, could not. With Rousseff’s disapproval rating at a record high and Congress rattled by scandals and impeachment proceedings, the challenge is as political as it is economic.

“And also out of fear that Levy’s replacement will signal a shift back to fiscal populism”. Some of the more controversial elements of Mr. Levy’s austerity plan – including the re-introduction of a tax on financial transactions (the CMPF) – may now be shelved or watered down. He took up allegations by opposition parties that she broke budget laws to increase spending during her 2014 re-election campaign.

In the brief statement from her office, Rousseff expressed thanks for Levy’s dedication and wished him success in his future endeavors, without elaborating.

There was no immediate comment on Friday evening from the press offices of Barbosa or Levy on the change at the Finance Ministry.

Brazilian President Dilma Rousseff on Friday replaced Finance Minister Joaquim Levy, a fiscal conservative appointed just over a year ago, with a close ally, Planning Minister Nelson Barbosa, the state-run Agencia Brasil news agency said.

It has since paralysed some of the country’s biggest companies, deepening the economic slowdown, and more importantly, soured relations between Congress and the president.