Brazil development bank chief quits, fueling political crisis

[RIO DE JANEIRO] The head of Brazil's powerful state development bank quit on Sunday, a day after far-right President Jair Bolsonaro threatened to sack him, fueling a political crisis engulfing the government.

BNDES president Joaquim Levy, a Chicago-educated economist and former finance minister in the left-wing government of ex-president Dilma Rousseff, submitted his resignation to economy minister Paulo Guedes after Mr Bolsonaro said he had a "price on his head."

"I thank the minister for his invitation to serve the country and I wish for success in the reforms," Mr Levy said in a statement.

Mr Levy's sudden departure follows a tumultuous week for a troubled government less than six months into its term, in which Mr Bolsonaro fired his third minister, retired general Carlos Alberto dos Santos Cruz, who had clashed with Mr Bolsonaro's sons, and then sacked the head of Brazil's postal service.

Mr Bolsonaro on Saturday offered equivocal support for embattled Justice Minister Sergio Moro, who has faced calls to resign over allegations he improperly collaborated with anticorruption prosecutors to keep leftist icon Luiz Inacio Lula da Silva out of the 2018 presidential race, which he was expected to win.

While he again defended Mr Moro against claims of wrongdoing, Mr Bolsonaro added he did not have "100 per cent" confidence in the former judge, who is seen by many Brazilians as a hero and is a key member of Mr Bolsonaro's cabinet.

Mr Moro handed Lula his first conviction in 2017, ultimately ending both his hopes of contesting the election and decades of center-left rule in Brazil.

Mr Bolsonaro had threatened on Saturday to dismiss Mr Levy, who had served as treasury secretary under Lula, over the appointment of an official to BNDES who has links to the left-wing Workers Party - Mr Bolsonaro's ideological enemy.

"Government is like this, it can't have suspicious people" in important positions, Mr Bolsonaro told reporters.

"I told him (Levy): 'Dismiss this guy (Marcos Barbosa Pinto) on Monday or I will fire you without going through Paulo Guedes.'"

'CRISIS FACTORY'

Mr Bolsonaro had previously criticized BNDSE, which has been a major financer of infrastructure projects in Brazil, Venezuela, Cuba and Mozambique, and had promised to open its "black box" to expose corrupt dealings.

Mr Guedes told G1 columnist Gerson Camarotti on Saturday that Mr Bolsonaro's "anxiety" with Mr Levy was understandable given the BNDSE president had failed to cooperate and then hired someone from the left.

Mr Levy was appointed by Mr Guedes, who himself is under growing pressure as he spearheads the government's economic reform agenda, including an ambitious overhaul of Brazil's bloated retirement system that has met with strong resistance from trade unions and a hostile Congress.

A general strike called by unions on Friday paralysed public transport and shuttered schools and banks in many Brazilian cities as thousands of protesters took to the streets against the pension proposal and the government's planned education spending cuts.

A pared-back draft of the pension reform, which was presented to Congress on Thursday, reduces expected savings from 1.2 trillion reais (S$411.3 billion) in 10 years to around 900 billion reais.

It sparked an angry exchange between Mr Guedes and Rodrigo Maia, the powerful speaker of the lower house of Congress with whom the Bolsonaro government's relations were already frayed.

Mr Guedes, who has vowed to resign if the bill is not passed or is watered down too much, said lawmakers were threatening to "abort" the pension reform and had shown "there was no commitment to future generations."

Mr Maia fired back that the government was a "crisis factory."

Reforming the pension system is Mr Bolsonaro's signature policy and is seen as crucial to his ability to deliver on other promised measures to shake up Latin America's biggest economy.

The growing turmoil is likely to rattle investors already worried about Brazil's weakening economy, which is at risk of sliding back into recession.

AFP