Finance Minister: to change economic staff depends on government's priorities

Any change to the government's economic staff  will depend on what the government will determine as priority, said Finance Minister Joaquim Levy on Friday (Dec. 18). Having breakfast with journalists, he avoided confirming whether he would step down the government and declared that he does not want to cause any embarrassment to President Dilma Rousseff.

"The fiscal year ended. This offers many alternatives. I do not aim to cause any embarrassment to the government. We need to be clear about our priorities over the several demands of the government and the president. Any change will depend on it," stated the minister.

Despite the journalists' insistent questions, the minister said the most important is to check the changes that the economic staff has been able to bring about this year and its commitment to structural reforms, rather than speculate about the risk that a possible step down would pose.

"Everything has risks. People look at the risk, but the point is to look at the return. [The country] needs to follow a certain path and  undertake the reforms in order not to stagnate. I think that's what I have been trying to say," he declared.

On Wednesday (Dec. 17) night, the media has reported that at the end of the National Monetary Council (CMN) meeting, Levy said, in a farewell tone, that he would not attend the council's following meeting, on January 21st. The minister avoided confirming the information, saying that all CMN meetings are secret.

"I can only say that today I recalled what my former colleague Pedro Malan [Finance Minister from 1995 to 2002] used to say, in relation to National Monetary Council's meetings. All that is said in this room stays only in this room. I have no idea of what you are talking about. You [journalists] should not fuel uncertainty," added the minister.

This week, the finance minister has been defeated when the National Congress, through an agreement with the government, reduced the primary surplus target—economy to pay interest on public debt—from 0.7% ($11.2 billion ) to 0.5% ($7.8 billion) of gross domestic product (GDP—sum of the wealth produced in the country) for 2016. The minister had committed to the 0.7% target for federal, state and municipal levels, but the government managed to reduce the target and avoid cutting $2.5 billion from Bolsa Família conditional cash transfer program for next year.

Initially, the government tried to provide a mechanism to offset investments from the Accelerated Growth Program (PAC) and expenses on epidemics and natural disasters, but an agreement with leaders in the Joint Budget Committee (CMO) has been negotiated to bring down the provision, which would permit the fiscal effort to be decreased to zero next year. When asked if cancelling the possibility of offset had represented a victory of the Finance Ministry, the minister said the fact showed the Congress' independence.

"It was not a victory of the Finance Ministry, but of Congress."

Without mentioning the approval of the Provisional Tax on Financial Transactions (CPMF), the minister said that "the important thing is to have clear goal. But it is important to remember that a clear goal also requires willingness to produce the needed revenue for the executive branch power allocate the approved budget. You cannot give someone a task, without giving the resources. This shows the independence and the harmonious operation among the branch powers," he said.

There is a small possibility of President Dilma Rousseff's impeachment and the proceedings has no chance of thriving, said Joaquim Levy. He repeated then that structural reforms and commitment to fiscal adjustment are necessary for the country to recover sustainable growth.

"After we overcome the political uncertainties, I think our economy will react well. At the moment, the prospect of impeachment is limited. People do not want more uncertainty. As long as  the government can negotiate, clear point out what can be expected for the next three years, uncertainty will be reduced," he reported. 

Translated by Amarílis Anchieta