Over the past 2 weeks, Brazil's Senate removed its president, Dilma Rousseff, and installed a new interim President, Michel Temer. Since Thursday, Temer has made clear who will fill key spots in the new Brazilian government.
On Friday, day 1 of his position, he already stirred up controversy by announcing a new Cabinet filled exclusively with white men. (That story here). Among those men is the new Minister of Finance (called Fazenda in Portuguese): Henrique Meirelles.
This week, Temer focused his attention on who will fill the most important economic posts of his presidency. The next Brazilian presidential elections are not until 2018; in lieu of a popular uprising that forces earlier elections, these men will control Brazil's economic future.
The new names will satisfy many Brazil observers who would like to see the country move in a less interventionist direction. Critics of Brazil's rapid economic decline have pointed to interventionist policies, such as Rousseff's interference in keeping fuel and electricity prices below-market, as the reason for the current decline in growth and rise in inflation. A collapse in commodities prices did not help.
The Brazilian economy contracted 3.8% last year, according to the government’s statistic agency, IBGE. It was forecast to shrink more than 3% this year. Unemployment now stands at almost 10%, and the inflation rate is hovering around that mark as well.
Below, Brazil's new economic chiefs.
Finance Minister: Henrique Meirelles
Meirelles headed Brazil's central bank from 2003-2010, during the commodities boom. He'll now have to manage a bust by combatting growing inflation and a widening fiscal deficit. He takes over from Nelson Barbosa, a left-leaning economist.
He already begun announcing his team this week (those team members below). He also commented on a proposal for a Constitutional amendment that would extend the "privileged forum" that cabinet members enjoy to all of the directors of the government, including the central bank chief. It is the same privileged forum that former president Luiz Ignacio da Silva invoked to avoid being tried for corruption in any venue besides the Supreme Court.
Folha de Sao Paulo reports that within this proposed amendment would be a provision that would grant decision-making autonomy to the central bank. According to Meirelles, this would not give the bank independence, but would create the legal provision that there should not be interference with the bank. "Decision-making autonomy in the central bank should not be confused with independence," Meirelles told reporters.
Central Bank Governor: Ilan Goldfajn
This morning, Temer announced the new leader of Brazil's central bank: Ilan Goldfajn.
Goldfajn previously served as the lead economist of Brazil's largest private bank, Itau Unibanco Holding SA.
Goldfajn, a Wall Street darling, was born in Israel and educated at MIT. He served as the central bank's director of economic policy between 2000 and 2003. He replaces Alexandre Tombini, who will retain his post until Goldfajn's appointment is ratified by the Brazilian Senate.
During this morning's announcement, Meirelles noted that he would discuss with Goldfajn changes to the bank's 8-member board, known as Copam. The board is under pressure to cut its benchmark Selic rate BRCBMP=ECI, which is currently at near 10-year highs. The bank's next rate-setting meeting is scheduled for June 8.
CEO of
On Monday, Brazilian paper O Globo reported that Temer would be appointing Parente to chair the state-run oil company, Petrobras. Parente, an engineer, is a former chief of staff for former President Fernando Henrique Cardoso, and a former executive secretary of the Finance Ministry.
Under Cardoso, Parente was tapped to head an emergency energy task for during the energy crisis. He'll need those skills for the current one: Petrobras's growth has been swallowed up by a corruption scandal and low global oil prices. Despite the discovery of offshore subsalt oil reservoirs, it is the most indebted oil company in the world. Divestment and bond repayment are key aspects of the current plan for recovery.
Parente was also CEO of
Other key Brazilian economic posts announced by Meirelles:
Department of Welfare: Marcelo Caetano
Secretary of Economic Monitoring: Mansueto Almeida Junior
Secretary of Economic Policy: Carlos Hamilton
