When Brazil’s second term president Dilma Rousseff got rid of Finance Minister Guido Mantega, the market breathed a sigh of relief. Mantega’s on-again, off-again stimulus plans made life unclear for corporate analysts. Were the tax breaks going to become permanent, or were they going to come back next quarter? Nobody knew. Maybe not even Mantega. So when he was replaced Joaquim Levy, a former International Monetary Fund capital markets expert, Brazilian Treasury Secretary, and director of Bradesco Asset Management, Dilma’s new team was given the benefit of the doubt. As if Levy brought “Street cred” to her cabinet, then seen over-run by Workers’ Party friends.
Levy himself is a Workers’ Party (PT in Portuguese) friend. It is surely known by all Brazil investors that Levy was Treasury Secretary under PT strong man and former president Luiz Inacio Lula da Silva. He came to town with a mission: clean up Mantega’s act by rolling back every single tax incentive and tax break known to man.
Gasoline taxes rose, so did gasoline prices. Good for Petrobras, bad for everyone else. And even though higher gasoline prices were good for Petrobras, the oil company is mired in a corruption scandal that turned its credit rating to junk and sent its NYSE listed stocks down to $5 and change twice this year.