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| Joaquim Levy and Henrique Meirelles |
The process of replacing Finance Minister Joaquim Levy gains ground within the government, with the consequent change in the economic policy’s guidelines. The succession is likely to take place in the beginning of January, according to sources of the political coordination and of the leadership of the Workers’ Party (PT), but the exchange could happen as early as December, if the political and economic crises worsen.
In recent weeks former president Luiz Inácio Lula da Silva and ministers of the political inner circle have intensified efforts to persuade President Dilma Rousseff to appoint former Central Bank President Henrique Meirelles to replace Mr. Levy.
Mr. Meirelles would be tasked with implementing the economic policy model advocated openly by Mr. Lula, which implies stimulating credit with an increase in domestic consumption and the authorization of international loans to state governments, a demand from governors so far stuck at the Finance Ministry.
Mr. Lula and the closest ministers to the president have talked weekly with Ms. Rousseff on the need to accelerate Mr. Levy’s replacement in order to resume economic growth. Mr. Lula convinced the president to receive former Finance minister, Antonio Palocci, 15 days ago at her official residence Granja do Torto. At that meeting, Mr. Palocci — who was a contemporary of Mr. Meirelles in the economic team of Mr. Lula — reinforced the request to appoint the formal central banker, two sources close to the Lula Institute told Valor.
At least three factors would justify Ms. Rousseff’s lower resistance to accept Mr. Meirelles: the worsening of the economic crisis, the depletion of Mr. Levy’s fiscal rebalancing measures, and the lack of names willing to accept the position.
Mr. Lula’s aides have searched, in vain, for market names to replace Mr. Levy in recent weeks. The profile sought was that of a notorious businessman, whose name would have instant market acceptance. In those recent talks, Ms. Rousseff would have said to her predecessor that she preferred Bradesco CEO Luiz Carlos Trabuco, who already rejected the invitation earlier this year.
"Dilma is torn between disliking Mr. Meirelles and [the fact] that he’s the only option to rebuild the economy faster", a member of the political coordination who closely monitors the talks told Valor.
"To stop the impeachment once for all, we need to reverse the deteriorating economic picture," adds a PT leader with access to negotiations. "If the economic crisis worsens, Dilma will fall not due to the Congress, but due to the clamor of the streets," the source says.
If the plans go ahead, Mr. Lula would be again the winner, after influencing the changes in the political inner circle of presidential office Palácio do Planalto. It was after a great deal of persuasion — and the resurgence of the idea of opening impeachment proceedings — that Ms. Rousseff agreed to appoint Jaques Wagner as Chief of Staff, replacing Aloizio Mercadante, and Ricardo Berzoini for the Secretary of Government, dismissing Miguel Rossetto.
But so far Mr. Lula has not been able to implement the changes he considers necessary to unlock the economy, such as the expansion of credit to the domestic market. The former president is convinced that the economy cannot resume growth while restricted by the fiscal adjustment; if Brazil does not come out of the crisis, the PT will be banned from politics already in upcoming municipal elections.
Changing the policy means a radical shift toward the expansion of credit. Mr. Levy rejects the idea, as well as alloweing international loans to governors or contemplate alternative measures to rebalance the budget, except for the revival of financial-transaction tax CPMF, which stalled in Congress.
To support the rhetoric to remove Mr. Levy, the PT says he did not deliver what he promised. They listed that Congress has passed most measures of the fiscal adjustment — such as the provisional measures that restricted social security benefits and the bill that reduced by half payroll-tax cuts — and the government shook hands with the market, but the crisis has not receded. Even the downgrade of Brazil’s sovereign credit rating by two credit agencies is being placed in the negative balance of Mr. Levy.
Mr. Lula is determined, being convinced that credit expansion is the way out of the crisis. "We have two options: either to increase taxes, which is what Dilma is proposing with the CPMF, or to make a strong credit policy. I would go with a credit policy ", Mr. Lula said last week in an interview with TV network SBT.
In October, during the National Congress of the Unified Workers’ Central (CUT), Mr. Lula said that "the solution is to increase domestic consumption." He noted that "if private banks do not want [to give] credit, there are the state ones." Mr. Lula has been repeating that there is pent-up demand in the domestic market, citing the example that 30% of Brazilian women do not have washing machines at home and are potential consumers.
In favor of Mr. Meirelles, the former president points out a number of qualities: he has market approval, international respect, and would free credit, that is, the policy that Mr. Lula wants to see implemented to improve the PT chances in the elections of 2016 and 2018.
By Andrea Jubé and Rosângela Bittar | Brasília
valor.com.br 10nov15
Waldemar Jezler
