Brazil's Levy has tough task to mend finances, regain trust
By Anthony Boadle and Alonso Soto
BRASILIA Nov 27 (Reuters) - Incoming finance minister Joaquim Levy faces tough hurdles, including resistance from within the ruling party, as he sets out to restore order to Brazil's messy public accounts, regain investor confidence and get a stagnant economy moving again.
The fiscal conservative picked by President Dilma Rousseff after her narrow re-election will have to deal with a budget that leaves little room for substantial cuts, and fierce opposition to austerity measures from within the ruling Workers' Party.
Party leftists oppose any belt-tightening that could threaten the expansion of social programs that lifted millions of Brazilians out of poverty in the last decade.
Levy's biggest challenge will be to convince skeptical investors that Brazil has a viable plan to balance its books and avert the threat of another credit rating downgrade next year.
In his first comments on Thursday, Levy said the new economic team is already looking at ways to cut public spending and he announced more realistic fiscal savings targets that those missed by outgoing Finance Minister Guido Mantega.
Markets welcomed Rousseff's surprise move to set ideology aside and put a fiscal hawk in charge of Brazil's finances, but investors were disappointed Levy did not announce specific measures.
"We are moving in the right direction, but we want more concrete steps," said Marzo Bernardi, who manages 34 billion reais ($13.20 billion) in assets for Western Asset in Brazil.
"Levy is an orthodox. He will go over the accounts with a magnifying glass. But he needs to take tough decisions and raise taxes to increase revenues if he wants to achieve even his more realistic fiscal savings target of 1.2 percent next year." Continuación...