Incoming Brazilian Finance Minister to Tighten Fiscal Policy

11/28/2014 - 09h23

The new economic team announced last Thursday (27) made it clear its goals: the gradual and credible adjustment of accounts, the end of government transfers to public banks, a transparent administration and rebalancing the economy to maintain social policies.

The general plan was revealed during a press conference with Joaquim Levy, announced as new Finance minister –as anticipated last Friday (21) by Vera Magalhães, editor of "Painel".

Nelson Barbosa is the future minister of Budget and Planning and Alexandre Tombini, current president of the Central Bank, will keep his job.

There will be a transition period to assemble the adjustment of public accounts. The government still tries to approve in Congress the new surplus target for 2014 in order to achieve this year's fiscal goal.

Assuming the role of group leader, Levy announced the primary surplus -savings used to pay the public debt- will be set at 1.2% of GDP in 2015 and at least 2% in the next two years.

"Achieving these goals is the key to increase credibility with investors and will create the basis for the recovery of economic growth and the consolidation of social advances", he said.

The new fiscal target expected for 2015 is below the range previously announced by current Minister Guido Mantega (2% to 2.5%), now considered impossible to be achieved.

The reduction is part of the new team's strategy of working specifically with targets that can be met and ensuring transparency of public accounts to regain credibility.

"This commitment [transparency] is an indispensable factor", said Levy.

The lack of confidence of the business community and consumers on government's economic policy is pointed as one of the main reasons for Brazil's slowdown. The country's economic growth should be near zero in 2014.

The respond to market's criticism, Levy emphasized the "government's immediate goal" is to set a target to reduce the public sector's gross debt - instead of net debt - in the next three years.

The new Finance minister said his measures to cut spending will include the end of government transfers to public banks started on Luiz Inácio Lula da Silva administration and extended throughout Dilma's mandate in an unsuccessful attempt to boost investments in the country.

Translated by JULIANA CALDERARI

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	Pedro Ladeira/Folhapress
	Brazil's incoming finance minister, Joaquim Levy, attends a news conference announcing the government's new economic team