Bloomberg News

Rousseff Said to Spare Brazil Finance Chief From Cabinet Shuffle

December 13, 2011

Nov. 30 (Bloomberg) -- Brazilian President Dilma Rousseff plans to keep Finance Minister Guido Mantega in his post when she shuffles her Cabinet early next year, a government official said.

Rousseff intends to replace a handful of ministers when she completes a year in office in January in a bid to improve government efficiency and crack down on corruption that has already led to the resignation of several aides, according to the official in the president’s office who asked not to be identified because he isn’t authorized to make public comments.

The president’s office has been receiving a growing number of media and investor inquiries regarding Mantega’s future since he began spending more time in Sao Paulo to care for his ailing wife, said the official. His deputy, Executive Secretary Nelson Barbosa, has assumed a higher profile in his place, giving interviews and making public appearances.

Rousseff trusts Mantega and believes he is doing a good job in steering Latin America’s biggest economy through global financial turmoil, the official said. His close ties to leading policy makers around the world are a valuable asset during the crisis, he added.

The Finance Ministry declined to comment yesterday.

Mantega, a 62 year-old former economics professor, took over as Brazil’s finance minister in 2006 after serving as former President Luiz Inacio Lula da Silva’s planning minister and head of the state development bank BNDES. He led Brazil’s response to the 2008 financial crisis, cutting taxes and ramping up state-led lending to fight off a brief recession and deliver 7.5 percent growth in 2010 that was the fastest in two decades.

Lula Holdover

A close ally of Lula, Mantega is one of 12 Lula-era officials Rousseff retained in her 38-member Cabinet when she took office. Five of them, including Mantega’s predecessor Antonio Palocci, have since resigned, all but one of them amid media allegations and police probes over alleged corruption.

Mantega was not Rousseff’s first choice for finance chief and earlier in the year his job looked in doubt as inflation accelerated, said Christopher Garman, a Latin American analyst at Eurasia Group. After surpassing the government target range in April, inflation has showed signs of slowing from a six-year high of 7.31 percent in September.

“He was never really that close to Dilma and talk about his leaving had become stronger when the government was slow to react to inflationary pressure earlier this year,” Garman said by telephone from Washington. “That talk has since subsided.”

Cabinet Moves

As part of Rousseff’s planned cabinet shuffle, the ministers of urban affairs, culture, labor and agrarian reform may be let go, said the official. Central Bank chief Alexandre Tombini, who spearheaded the central bank’s surprise rate cut in August, will remain in his post, he added.

While some ministers, such as Education Minister Fernando Haddad, are facing an early 2012 deadline to step down and be eligible to run in next October’s municipal elections, the cabinet moves are designed to weaken the grip of government- allied parties on certain ministries, the official said.

Rousseff and Mantega’s Workers’ Party lacks a majority in Congress and depends on the votes of a multi-party coalition to pass legislation. While Rousseff has continued a Brazilian political tradition of divvying up cabinet positions in proportion to parties’ electoral strength, she’s drawn rebuke from allies by expressing a preference for technocrats in other key positions and by thwarting efforts to boost spending on earmarks.

The government is still studying whether to fold the ministries of fisheries, maritime ports and gender issues into other cabinet-level portfolios, the official added.

--With assistance from Andre Soliani in Brasilia. Editors: Robert Jameson, Joshua Goodman

To contact the reporters on this story: Raymond Colitt in Brasilia at rcolitt@bloomberg.net;

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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