Brazil's New Finance Minister Enters Fray to Fight Recession
SAO PAULO — BRAZIL's business community is hoping Marc'ilio Marques Moreira, the new economy minister set to take office today, will help lead the country out of the deep recession it has been in since last fall. Mr. Moreira takes over for Zelia Cardoso de Mello, who had been in the post since March last year, when President Fernando Collor de Mello took office. Ms. Cardoso said she was leaving ``for personal reasons,'' but had been under pressure from businesses after a wage and price freeze January 31. She had also come into conflict with bankers and Mr. Collor's inner circle.
Under Cardoso, the government froze many personal and corporate savings accounts in a bid to halt inflation. But in recent months, judges have been overruling the plan by granting access to funds to those who take legal action to get to their money.
Because of the wage and price freeze, Cardoso bequeathed her successor a monthly inflation rate below 10 percent, down from over 80 percent when Collor became president. But economists expect prices to rise again when the freeze is lifted.
Presidential spokesman Claudio Humberto da Silva said Wednesday night that economic policy - stabilization followed by growth - will not change.
Nevertheless, Brazilian business people expect Moreira to take more orthodox economic measures to alleviate the recession, Brazil's worst since World War II. The measures might include cutting taxes, says Miguel Jorge, spokesman for Autolatina, the joint venture between Volkswagen AG and Ford Motor Co., Brazil's largest automaker.
Other business people point out that Brazilian economic policy has been running parallel to that of neighboring Argentina, as both countries battle chronic inflation. In Argentina, Finance Minister Domingo Cavallo decided to keep the public deficit in check by linking the money supply to the dollar. This textbook inflation solution might also be applied in Brazil.
A former banker, Moreira was until his appointment Brazil's ambassador to the United States, working to improve ties between the two countries. He has also been closely involved in Brazil's foreign-debt negotiations. Brazil recently agreed to pay private banks $2 billion in overdue interest this year, and must now renegotiate its $52 billion private bank debt.