(Bloomberg) — Guido Mantega, a former Brazilian finance minister, said President Luiz Inacio Lula da Silva’s government is looking to recruit him to join the board of Braskem SA and that he would take the post if shareholders approve.
“I was contacted by the chief of staff's office and I responded,” Mantega said in an interview when asked about the petrochemical maker. “If the shareholders' meeting decides on this, I will attend the Braskem board meeting.”
The government has been leaning on Mantega, a close economic adviser to President Lula, as it seeks to expand its influence over major companies. Last month, Lula fired Petrobras' CEO in a dispute over paying dividends instead of investing them. The leftist leader is under pressure to increase spending, stimulate economic growth and halt his slide in popularity.
Specifically, Mantega could be appointed vice chairman of Braskem's board of directors through Petrobras, according to a person familiar with the matter, in which case the former minister, with his experience at the state oil company, would be more likely to be approved, the person said.
Earlier this year, Lula tried to appoint Mantega as CEO and chairman of mining company Vale, drawing backlash from both company executives and investors. Mantega, a 75-year-old Workers' Party member, was Brazil's longest-serving finance minister under Lula and his successor, Dilma Rousseff.
In his role, Mantega supported countercyclical fiscal measures to shore up Brazil's economy after the 2007-2008 global financial crisis, but those policies worsened the finances. During his term, the government also intervened in the power sector to force lower electricity prices.
The chief of staff's office did not immediately respond to a request for comment, and Braskem declined to comment.
Braskem shares were down 1.1 percent in afternoon trading on Monday, to their lowest since February 16th.
“Irrational” policies
Mantega said Brazil's main economic problem today is the “irrational” monetary policy being pursued by central bank governor Roberto Campos Neto. The country needs more investment to grow, and higher-than-necessary interest rates are driving up borrowing costs for companies, he said.
Mantega also said Brazil's inflation was contained and policymakers saw no reason to ease the pace of monetary easing.
Campos Neto, who was appointed by right-wing former President Jair Bolsonaro last month, led most of the central bank's board of governors in voting to cut the benchmark Selic rate by 0.25 percentage point to 10.5%, but all four of Lula's appointees supported a bigger half-point cut.
“The Bolsonaro administration continues to control monetary policy,” Mantega said. “This is wrong. I am not against the independence of the central bank, but it must be based on the new administration. Otherwise fiscal and monetary policy can clash, and that is what is happening now.”
Financial Goals
The former minister cited the government's decision to set looser fiscal targets for 2025 than previously indicated as one of the reasons for the central bank's move.
In April, the economic team announced it would aim for a balanced basic budget excluding interest payments next year, rather than a budget surplus. Still, Mantega doesn't think the change will be enough to stimulate inflation.
“You can't say that just because the government increases spending by half a percent in 2025, that's going to create inflation,” he said. “That's not going to happen.”
Mr. Mantega agreed with current Finance Minister Fernando Haddad that Brazil's 3 percent inflation target is too tough. He said he expected policymakers would do a more rational job once Lula appointees hold a majority on the governing board next year.
“Keeping inflation under control must be an absolute priority because inflation has a negative impact on the economy,” he said. “The new board will certainly follow the guidelines of the National Monetary Council, which has set the inflation target to be pursued, which is very low given the state of the Brazilian economy.”
Mantega also said Lula feels more insecure now than he did during his previous years in power because the balance of political forces has shifted, most notably that Congress now has more influence than before.
“He has to accept decisions that he doesn't want to make sometimes, but he does,” Mantega said. “So maybe that's why he's suffering even more in this situation.”
–With assistance from Bruna Lessa and Mariana Durao.
(Adds appointment details in fourth paragraph)
Read this article at bloomberg.com
©2024 Bloomberg LP
You are on Mint! India's No.1 News Site (Source: Press Gazette). For more of our business coverage and market insights, click here!
