Bolsonaro to visit Paulo Guedes. Sources deny resignation rumors

The anti-bomb squad has put Brazil’s Economy Ministry building under surveillance, as President Jair Bolsonaro is set to pay a visit to department head Paulo Guedes after lunch. The two are expected to address the media after their meeting. 

Per multiple reports, Mr. Guedes has resigned — following a similar move by four of his top lieutenants yesterday — and Mr. Bolsonaro is reportedly hoping to change his mind. One source close to the president, however, tells The Brazilian Report the Economy Minister won’t resign.

Mr. Guedes’ underlings opposed the government’s decision to poke holes in the federal spending cap, one of the country’s key instruments to tame public spending. More than ever, the decision showed that the Economy Ministry has less of a say over the country’s economic policy than the president’s congressional allies. 

Once heralded as Brazil’s economic tsar, Paulo Guedes has threatened to walk on numerous occasions in a push for more power, throwing tantrums whenever the administration turns its back on austerity measures. These outbursts have become something of a joke for other members of the cabinet, who believe Mr. Guedes’ attachment to his job will ultimately make him stay put.

However, the fact that Mr. Bolsonaro is the one paying the visit — instead of the other way around — is seen as a sign that Mr. Guedes’s threats could well be serious. Even after caving to measures increasing public spending, breaching the federal cap is reportedly his red line.

Brazilian markets are operating in the red today, with the stock market down over 3 percent at 1 pm, and the PTAX foreign exchange rate reported by the Central Bank rising 1.23 percent, at BRL 5.7117 to USD 1.

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