Brazil's finance minister Joaquim Levy has had enough. In a not so surprising move, the leading financial figure in Latin America’s largest economy handed in his resignation late Friday and has already been replaced by Nelson Barbosa, the current planning minister, who was handpicked by left-leaning President Dilma Rousseff.
Joaquim Levy, the Chicago University-trained former head of the country’s Treasury, was brought into Rousseff’s government earlier this year specifically to make tough decisions to raise taxes and cut spending. His social programs, many of which were introduced by Ms. Rousseff’s predecessor and former mentor, Luiz Inácio Lula da Silva, have helped millions of Brazilians climb out of poverty.
Mr. Levy was appointed by Ms. Rousseff at the start of her second four-year term in January to rebalance the nation's sinking public finances after years of prolonged fiscal stimulus. His decision to leave followed continued disagreements with the president and the governing Worker's Party over his attempts to raise taxes and cut government expenses.
Worst Recession in 25 Years
Brazil is facing its worst recession in 25 years. The economy shrank by 1.7% in the third quarter of the year compared with the second quarter. Compared with a year ago, the economy is 4.5% smaller. Inflation is also on the rise, with the annual rate hitting 10% in November. The real weakened 2.7 per cent to R$3.9831 while the Ibovespa benchmark index ended down 2.98 per cent at 43,910 points.
Mr. Levy's resignation is a heavy blow to those who pushed for tougher budgets and limited austerity to tackle Brazil's deepening economic crisis. But Mr. Barbosa says he will keep a tight control on public spending.
"If we control government spending we will manage to control public debt and we will eventually be able to reduce public debt," said the new minister.