Exit of BNDES president another ideological whim of Bolsonaro government

. Jun 17, 2019
bndes joaquim levy Exit of BNDES president another ideological whim of Bolsonaro government

Almost six months in, another member of the Jair Bolsonaro administration has bitten the bullet. The latest victim is Joaquim Levy, the head of the Brazilian Development Bank (BNDES), who resigned on Sunday morning under pressure from the president himself.

The justification for this unrest was Mr. Levy’s appointment of lawyer Marcos Barbosa Pinto to lead the bank’s stock market division. Mr. Pinto served as an advisor to the BNDES during the Workers’ Party government, the group which remains public enemy number one, as far as Jair Bolsonaro and his cronies are concerned.

While claiming his government only makes “technical appointments” and is run without ideological bias, the pressure on Mr. Levy, and the isolation of Marcos Barbosa Pinto are further examples of the Bolsonaro administration purging government workers based on connections to the Workers’ Party.

</span></p> <p><span style="font-weight: 400;">Joaquim Levy is something of an ever-present in Brazilian government. Under former President Fernando Henrique Cardoso he served as the deputy secretary of Financial Policy in the Ministry of Finance, and then went on to become the chief economist of Mr. Cardoso&#8217;s Ministry of Planning. Under former President Lula, he was the secretary of Treasury. Lula&#8217;s successor, Dilma Rousseff, went as far as naming him Finance minister, a role he lasted in for just over 11 months.</span></p> <p><span style="font-weight: 400;">However, it was <a href="">Mr. Levy&#8217;s participation in the Workers&#8217; Party government</a> that sparked Jair Bolsonaro&#8217;s mistrust in the economist. This may come as odd, as his spell as Finance Minister in Dilma Rousseff&#8217;s second term was hardly a popular one among the Workers&#8217; Party and the broader left. After promising moves to reduce inequality and encourage consumption, Ms. Rousseff pulled a U-turn in appointing Mr. Levy, as an orthodox neoliberal economist who enforced the &#8220;bitter pill&#8221; of austerity on the public, causing the Workers&#8217; Party&#8217;s popularity to slump further.</span></p> <h2>The BNDES &#8220;black box&#8221;</h2> <p><span style="font-weight: 400;">The strictly ideological issue was not the only reason for Mr. Levy&#8217;s departure. Since the campaign, Jair Bolsonaro has promised to open up what he calls the &#8220;black box&#8221; of the development bank, relating to a form of witch hunt involving previous loans granted by the bank to countries such as </span><a href=""><span style="font-weight: 400;">Cuba</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Venezuela</span></a><span style="font-weight: 400;">—which the Brazilian government sees as enemies.</span></p> <p><span style="font-weight: 400;">During his short tenure in charge of the BNDES, Joaquim Levy did not make any maneuvers to open this famous &#8220;black box.&#8221; One potential explanation for this is that this treasure trove of dodgy deals may not actually exist. Among liberal economists, the BNDES is seen as one of the most transparent institutions of its kind, and parliamentary investigations into the bank have been unable to find any indication of concealment or wrongdoing. Loans to Venezuela, Cuba, et al, are all listed on the bank&#8217;s website in exhaustive detail, leading many to believe the talk of a &#8220;black box&#8221; is little more than a diversion tactic.</span></p> <h2>Political repercussions</h2> <p><span style="font-weight: 400;">Despite being the latest in a long list of government officials to be axed since the beginning of the year, Joaquim Levy is the first departure of the economic team of Paulo Guedes, the administration&#8217;s economic guru.</span></p> <p><span style="font-weight: 400;">At the time of his appointment, the president expressed his unease with Mr. Levy. The public line was that Paulo Guedes vouched for him, so Mr. Bolsonaro gave his Economy Minister the benefit of the doubt. </span></p> <p><span style="font-weight: 400;">Now, having directly interfered in his ministry, Mr. Guedes is unlikely to be pleased with Mr. Bolsonaro&#8217;s conduct in the exit of his BNDES president. The two met this morning in an unscheduled meeting.</span></p> <p><span style="font-weight: 400;">House Speaker, Rodrigo Maia, was one of the most vocal in deriding the government&#8217;s treatment of Joaquim Levy, calling the president&#8217;s actions &#8220;unprecedented cowardice.&#8221;</span></p> <h2>Firings in the Bolsonaro government</h2> <p><span style="font-weight: 400;">The exit of Joaquim Levy was another example of the Bolsonaro government&#8217;s strategy for firing members of the administration. Instead of bureaucratic dismissals and public statements, the strategy is to throw the outgoing government agent to the wolves of public scrutiny, allowing their reputation to be cast into doubt by the electorate, before finally bringing down the guillotine.</span></p> <p><script src="" type="text/javascript" charset="utf-8"></script></p> <p><span style="font-weight: 400;">As opposed to dismissing Mr. Levy, the president gave an interview saying that he had had it &#8220;up to here&#8221; with the BNDES president. &#8220;Either he fires [Marcos Barbosa Pinto], or I&#8217;ll fire [Mr. Levy] on Monday!&#8221;</span></p> <p><span style="font-weight: 400;">A few names have emerged as frontrunners for the job as BNDES president. They are: Solange Vieira, president of Susep (Brazil&#8217;s insurance market watchdog), Carlos da Costa, secretary of Productivity and Employment, Salim Mattar, secretary of Privatizations, and former Central Bank President Gustavo Franco. Economy Minister Paulo Guedes has already started talks with the latter two, but no formal invitation has made as of yet.

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