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Brazil’s former finance chief says Lula’s government contacted him to work at Braskem
(Bloomberg) — Former Brazilian Finance Minister Guido Mantega said President Luiz Inácio Lula da Silva’s government approached him for a seat on the board of Braskem SA, and that he will accept the role if shareholders approve.
“I was contacted by the Civil House and made myself available,” said Mantega in an interview when asked about the petrochemical producer. “If the general meeting decides this, then I will go to the Braskem board.”
The government is turning to Mantega, one of Lula’s closest allies and economic adviser, as it maneuvers for greater influence in key companies. Last month, Lula fired the president of Petrobras over a dispute over the dividends he paid instead of using the money for investments. The leftist leader is under pressure to increase spending, stimulate economic growth and halt a decline in approval ratings.
Lula tried to appoint Mantega as CEO and president of mining company Vale SA earlier this year, in a move that provoked resistance from both his top brass and investors. A 75-year-old member of the Workers’ Party, he was Brazil’s longest-serving Finance Minister under Lula and his successor, Dilma Rousseff.
In this role, Mantega supported countercyclical fiscal measures to support Brazil’s economy following the 2007–2008 global financial crisis, although these policies led to a deterioration in public accounts. During his administration, the government also intervened in the energy sector to force down electricity prices.
The Chief of Staff’s office did not immediately respond to a request for comment. Braskem declined to comment.
‘Irrational’ policy
Mantega said Brazil’s main economic problem now is the “irrational” monetary policy advocated by central bank governor Roberto Campos Neto. The country needs more investment to grow and higher-than-necessary interest rates are increasing borrowing costs for businesses, he said.
Furthermore, Brazil’s inflation is under control, Mantega said, meaning there is no reason for policymakers to slow the pace of monetary easing.
Last month, Campos Neto, appointed by right-wing former president Jair Bolsonaro, led the majority of central bank board members who decided to cut the Selic rate by a quarter of a point to 10.5%. All four directors nominated by Lula, however, favored a larger cut, half a point.
“The Bolsonaro government continues to manage monetary policy,” said Mantega. “This is wrong. I am not against the independence of the central bank, but it has to be based on the new government. politics, which is what’s happening now.”
Fiscal Target
One of the reasons that could explain the logic behind the central bank’s measure, said the former minister, was the government’s decision to achieve a fiscal result for 2025 that was less ambitious than previously indicated.
In April, the economic team said it would seek a balanced primary budget, which excludes interest payments, rather than a surplus next year. Still, in Mantega’s opinion, this change is not enough to stimulate inflation.
“It cannot be said that just because the government is going to spend half a percentage point more in 2025, there will be inflation,” he said.
Mantega agrees with current Finance Minister Fernando Haddad that Brazil’s 3% inflation target is too demanding. He said he hopes lawmakers will do a more rational job after Lula’s appointees become a majority on the council next year.
“Controlling inflation has to be an absolute priority, because inflation harms the economy,” he stated. “The new board will certainly follow what is defined by the National Monetary Council, which established inflation targets that will be pursued and which are very low for the situation of the Brazilian economy.”
Mantega also said that Lula is more anxious now than in his previous periods in power because the balance of political forces has changed. Most notably, Congress had more influence than in the past.
“Sometimes he has to accept decisions he doesn’t like, but he does,” said Mantega. “So I think maybe he’s more distressed because of this situation.”
–With assistance from Bruna Lessa and Mariana Durão.
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