Brazil’s Sea of Mud Ends Up Swallowing Finance Minister

Brazil’s Finance Minister Antonio Palocci, 45, architect of the government’s orthodox market policies stepped down on Monday as a corruption scandal swelled around him.

Guido Mantega, president of Brazil’s national development bank BNDES, will replace Palocci as the country’s new finance minister revealed press reports from Brasí­lia and São Paulo. However the government would not comment on the report.

"Minister Antonio Palocci decided to ask the President of the Republic to be relieved of his duties. The minister is forwarding a letter to President Lula explaining his reasons," the Finance Ministry said in a brief statement.

The former Trotskyite and trained physician has since last August defended himself against allegations he took kickbacks from contractors when he was mayor of Ribeirão Preto, a city in São Paulo state, in the mid-1990s, but claims of further corruption acts flared again almost daily for the past two weeks.

A house caretaker said he repeatedly saw Palocci at a villa in Brasí­lia, Brazil’s capital, suspected of being used by Palocci’s former aides to divide up the proceeds of extortion and to meet prostitutes.

Pressure mounted on the government after a senior official in the Caixa Econômica Federal, a state-owned bank, was found to have illegally disclosed the caretaker’s bank record in an apparent attempt to discredit him.

The opposition Brazilian Social Democracy Party earlier this month called on Palocci to step down because of the allegations. Palocci on March 14 denied the allegations, saying he never went to the house and didn’t know what happened there.

Speculation of Palocci’s imminent ousting did not take markets by surprise because President Lula was forecasted to reshuffle his cabinet this week, looking ahead to the October presidential and Congress elections.

Palocci was Lula’s closest and most trusted aide and is the most important figure to fall victim to a corruption scandal that rocked the government last year forcing the resignation of another strong man in the cabinet, José Dirceu.

The former cabinet chief was involved in a wider scandal of illegal campaign funding and vote buying in Congress by the ruling Workers Party.

Palocci’s exit happens at a crucial moment since campaigning for the presidential election next October is heating up and President Luiz Inácio Lula da Silva is widely expected to run for a second term. But eliminating a "serious liability" six months before "will help cut losses", said reliable sources from the ruling coalition.

Palocci’s departure would leave the government more vulnerable to pressures to boost spending and probably lead to declines in financial markets, according to economists in São Paulo.

As Lula’s closest adviser, Palocci fended off a push by members of the ruling coalition to boost spending and scale back on repurchasing debt.

However Brazil’s former President Fernando Henrique Cardoso today said the country’s economic growth won’t suffer from political turmoil sparked by the corruption allegations.

"The world sees Brazil as having a solid foundation" Cardoso said in an interview in New York adding that "the economy is solid and doesn’t depend only on the government."

But Cardoso underlined that Lula seems "lost in command" of the nation, saying he has done little to reinforce credibility in his government after accusations of corruption were made in Congress.

Since Lula took office in January 2003, Palocci pushed annual inflation rate down to about 5% from 15%, curbed the budget deficit and bolstered economic growth. Brazil’s stock market index has tripled and the currency has climbed more than 60% against the dollar since then.

Mercopress – www.mercopress.com

Tags:

  • Show Comments (1)

  • Guest

    Solid foundation……
    …..in corruption ?????

    Ohhh yess, the foundation was/is/will be here for ever !!!!!

    Deeply rooted in the blood and the genes of all the politicians !

    No doubt about it !
    No doubt about them !

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

S&P Downgrades Brazil

Brazilian and Latin American equities climbed, alongside gains in U.S. stocks on increased merger ...

Brazil: Farmers and Indians Dispute Land

The visit to the disputed area was of fundamental importance so that it became ...

Rapidinhas

Breasting the competitionCreated by Brazilian ad agency DM9 for lingerie manufacturer Valisčre, the display ...

Mean Tony Blues

The national outrage against Antonio Carlos Magalhães was very vocal, and the public demanded ...

Brazil’s Supreme Sends Abducted American Boy’s Case Back to Lower Courts

Brazil's Supreme Court (STF) decided this Wednesday, June 10, in a 10-0 vote, not ...

Best-seller Books, Plays and Movies

In a city brimming with earthly delights, one’s thoughts turn to finding a little ...

Brazil’s Lula Complains That Rich Nations Are Not Helping Enough the Poor

During his weekly radio talk to the nation, today, Brazilian President Luiz Inácio Lula ...

With a Hand from Israel Brazil Embarks on Long-Term Olive Tree Project

The Brazilian Agricultural Research Corporation (Embrapa) is testing the cultivation of Moroccan olive trees ...

Brazil Spreads Wings With New Arab Embassy

Brazil’s Minister of Foreign Relations, Celso Amorim, announced February 22, during his visit to ...

Brazil Spends US$ 27 Bi and Is Leader in Military Spending in Latin America

According to the latest report from the Stockholm International Peace Research Institute, SIPRI, Brazil ...