After Brazil’s monetarist Finance Minister Henrique Meirelles announced new members of his economics team on Tuesday, Goldman Sachs waxed ecstatic, calling it a “dream team.” Goldman official Alberto Ramos told The Financial Times that the team of “respected, well-trained technocrats,” was an important signal that there will be a dramatic shift in policy, as Rousseff’s “heterodox” policies had turned Brazil into a “basket case.”
Meirelles, referred to as a “super minister” who will wield great power—it was he who announced the team, not interim President Temer—chose Ilan Goldfajn, currently chief economist at Brazil’s largest private bank, Itau Unibanco, as new head of the Central Bank. Most telling about Goldfajn is not that he worked for the IMF and World Bank, but that he previously worked at the Central Bank under Arminio Fraga, George Soros’s former employee at the Quantum Fund, who served as its governor from 1999 to 2003. He also worked for Fraga’s Brazilian investment firm, Gavea Investimentos Ltda.
“You could not ask for a better person” to take this post, Fraga told The Wall Street Journal.
“Orthodox” economist Goldfajn will be in charge of monetary and currency policies, and advocates slashing public spending, “tough inflation targeting” and pension reform to “rebalance” fiscal accounts. Meirelles, who has announced that pension reform is an urgent matter, has created a special task force, led by new Social Welfare Minister Marcelo Caetano, which must come up with a reform proposal within 30 days.
The other dream-team member is Cambridge-trained Mansueto Almeida, Secretary of Economic Monitoring, who previously served as advisor to Temer ally and hardcore monetarist Aecio Neves, who lost to Dilma Rousseff in the 2014 presidential elections.
Meirelles is expected to submit a bill to Congress to amend the Constitution to establish the independence of the Central Bank, arguing that Dilma’s “interference” in the economy helped cause Brazil’s economic downfall. Dilma “strayed from balanced budgets and inflation targeting, in favor of more lax policies aimed at spurring economic growth and expanding social programs that helped lift millions out of poverty,” The Wall Street Journal complained May 17.