A representative of the Brazilian Ministry of Finance told Infrastructure Investor over the weekend that there is no truth to rumors that Minister Joaquim Levy is planning to resign following disagreements over austerity measures being proposed by the executive agency.
Levy last week cancelled plans to attend the G20 summit in Turkey to attend a last-minute meeting, but later announced he would indeed be present at the summit.
“Levy is a valuable minister in this administration who canceled his trip abroad to attend an important budget discussion,” said Institutional Minister Edinho Silva to Reuters at the time.
According to recent reports, Levy disapproves of including a primary deficit in next year's budget, as was the case with a proposal that was presented to Congress by President Dilma Rousseff's administration last week. Instead, the minister reportedly prefers a plan that includes deeper cuts to public spending, an idea that is contentious among politicians as well as the Brazilian people, who are struggling through the effects of economic slowdown across several industries.
Brazil, which celebrated its Independence Day from Portugal on Monday, has had a rough run of it for the past half-decade. After enjoying impressive growth levels in the first decade of the 21st century, the country's fortunes turned sour and GDP began slowing, with some saying that the economic woes were brought on by policies that were unfriendly to outside competitors.
Data gathered for an August 2015 report published by Franklin Serrano and Ricardo Summa of the Center for Economic and Policy Research in Washington, DC, entitled 'Aggregate Demand and the Slowdown of Brazilian Economic Growth from 2011-2014' points to a few small but key shifts in federal economic policy, which they believe are at the heart of Brazil's economic woes.
Their research posits that the slowdown is “overwhelmingly the result of a sharp decline in domestic demand, rather than a fall in exports and even less any change in external financial conditions”.
In an effort to correct course, new schemes such as the BRL$198.4 billion (€46.4 billion; $51.9 billion) Infrastructure and Logistics Investment Programme (PIL) were announced by the government earlier this year. The latter has more recently evolved to include measures that increase the attractiveness of project tenders for international investors and developers by removing local biases from the procurement process.
It is hoped that by reigniting the pilot light on infrastructure and energy project development in Brazil, which has been drastically slowed by the Petrobras scandal, the country can cook up some economic progress to slow inflation from its current galloping rate of more than 9 percent.
The real rebounded following Levy's announcement on Wednesday evening last week that he would not be resigning from his post, with some reports noting this as exemplary of the respect of the markets that Levy wields. But the rebound was short-lived with a closing value of USD$3.84 on Friday, the currency's lowest value since October 2002.