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Bolsonaro Eliminates Government Authority Over Brazil’s Central Bank

Jair Bolsonaro - El American

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Brazilian President Jair Bolsonaro reformed his government on Wednesday with changes in two ministries and approved a law that grants autonomy to the Central Bank, which he framed as part of his goal of liberalizing the country’s economy.

According to Bolsonaro, the move is part of a “democratic effort” to generate confidence among investors.

Bolsonaro took advantage of the occasion to insist that his decision to change the president of state-owned Petrobras has not entailed “interference” in the oil company’s business, a perception that settled in the financial markets and brought down the company’s shares on the Sao Paulo, New York and Madrid stock exchanges.

To replace the current president of Petrobras, economist Roberto Castello Branco, Bolsonaro has proposed Army reserve General Joaquim Silva e Luna, whose appointment must be analyzed by the company’s shareholders meeting.

The law signed by Bolsonaro was approved last week and detaches the Central Bank from the Ministry of Economy, on which it depended until now, to turn it into an autonomous autarchy, which will be responsible for designing monetary policy.

The bill maintains the way in which the president of the Central Bank is appointed, which will continue to be proposed by the Executive and submitted to Congress for approval.

However, it establishes as a new four-year term for the president of the entity, which will begin in the third year in power of the head of State in office, with the possibility of a single reelection for the same period of time.

According to the President of the Central Bank, Roberto Campos Neto, with this law, which gives autonomy to the issuer, Brazil joins the “most modern” countries, which “have lower inflation,” which “is the most perverse of taxes”, and makes things “more predictable” for investors.

The changes

In the same act, Congressman Onyx Lorenzoni assumed the General Secretariat of the Presidency handing over to Congressman Joao Roma the position of Minister of Citizenship, which he held until now.

Lorenzoni is a leader of Democrats (DEM), a right-wing party that together with the Republican Party (PR), to which Roma belongs, is part of the so-called “centron”, a motley group of conservative forces that controls the Parliament and in recent months has moved closer to the government led by Bolsonaro.

As the new Secretary General of the Presidency, Lorenzoni will be responsible for coordinating with Parliament, while Roma, as Minister of Citizenship, will manage multi-million budgets and control the Government’s social programs.

The budget of Roma’s office will even have to be expanded in the coming weeks, with the approval of a new subsidy for the poorest classes of the country, which the Parliament is already debating to help alleviate the effects of the coronavirus pandemic.

The parties that make up the so-called “centron” have guaranteed their support to Bolsonaro’s government, who with that political base will have to prepare the coalition with which he will aspire to renew his four-year mandate in the presidential elections of October 2022.

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