BRASILIA (Reuters) – Brazilian Finance Minister Joaquim Levy on Monday denied any disagreements within the government over unpopular budget cuts and said he did not plan to leave his post.
Speculation of a rift between Levy and others in the government emerged on Friday when he unexpectedly missed the press conference to announce the spending cuts, a key part of the finance minister’s austerity push.
Fears among investors that Levy could be losing the trust of President Dilma Rousseff contributed to a drop of more than 1 percent in the Brazilian real <BRBY> early on Monday. It later rebounded somewhat to trade down 0.5 percent.
The government said Levy missed last week’s briefing because he had a cold, but local newspapers reported that he stayed away in protest of what he considered insufficient cuts.
Levy sought to quash the rumors on Monday, calling a press conference to announce redoubled efforts to pass austerity measures through Congress.
“There was no disagreement, nothing,” he said alongside Aloizio Mercadante, Rousseff’s influential chief of staff. “I really had a cold, or the flu.”
Asked whether he had considered stepping down, Levy said: “I didn’t think of quitting at all.”
The former banking executive is considered key to Rousseff’s effort to regain the trust of investors after years of heavy spending and interventionist policies that threatened Brazil’s investment-grade rating.
Analysts say his departure would trigger a confidence crisis that would further sink an already shrinking economy.
An orthodox economist trained at the University of Chicago, Levy has led efforts to raise taxes and limit spending to rebalance public accounts.
The government on Friday announced a spending freeze of 69.9 billion reais, in line with market expectations, but not enough to meet a key fiscal goal this year.
Speaking to reporters earlier on Monday, Levy said the size of the budget cuts was “adequate” but sounded a cautious note about prospects for the Brazilian economy and government revenues.
“We have a revenue problem,” he said. “Over the past few years, revenues have been systematically insufficient to meet government needs. We’re seeing this year that revenues haven’t been very meaningful either.”
He said the government needed to push ahead with deeper economic reforms than tax increases to overhaul its finances. He added that he was not considering another increase in the levies on financial transactions, known as IOF taxes.
Levy also acknowledged that the economy probably contracted in the first quarter.
(Reporting by Alonso Soto; Writing by Walter Brandimarte; Editing by Lisa Von Ahn and Leslie Adler)