Brazil's fiscally conservative finance minister replaced amid economic, political upheaval

RIO DE JANEIRO – 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.

The swap comes amid Brazil’s worst recession in 25 years, as a mushrooming corruption scandal and political crisis continue to hamper recovery efforts.

Nicknamed “Scissorhands,” Levy championed a raft of belt-tightening measures, but few of his proposals made it through Congress. He clashed frequently and publicly with Rousseff, prompting rumours of his impending resignation going back months.

In a statement ahead of the announcement of his departure, Levy acknowledged preoccupation about the plight of Brazil, whose economy is expected to contract more than 3.5 per cent this year.

“I come to the end of 2015 worrying about the situation of the country, particularly the economy,” he wrote. “But I keep great confidence in our economy’s ability to recover and its potential to grow.”

Levy, a University of Chicago-trained economist and top executive with the Brazilian bank Bradesco, was regarded with suspicion by the more left-leaning members of Rousseff’s Workers’ Party, who openly opposed his November 2014 appointment.

Levy’s replacement, Barbosa, is widely seen as a close ally of Rousseff. He worked under former Finance Minister Guido Mantega before leaving in 2013. Rousseff named him Planning Minister earlier this year.

Rumours of Levy’s departure led to a further downturn in late trading Friday of Brazil’s beleaguered currency, which has lost around one-third of its value over the past year. Though the rumours of the job swap swirled all day, the official announcement came after the close of Brazil’s stock market.

The change comes on the heels of the decision by the Fitch ratings agency to downgrade Brazil’s credit rating to junk status. Another one of the big three ratings agencies, Standard & Poor’s, took the same step in August.