Bolsonaro’s Petrobras advance strikes its image and scares markets

RIO DE JANEIRO.- The Brazilian market reacted with strong pessimism after the decision to Jair Bolsonaro, dissatisfied with the increase in fuel prices, to appoint a general in command of Petrobras. The company lost almost a quarter of its value and the São Paulo Stock Exchange collapsed a day of strong nervousness for fear that the intervention in the oil company would mark the deepening of a populist agenda.

The sudden movements occurred on the first working day after Bolsonaro announced the appointment of Joaquim Silva and Luna, Reserve General who was Minister of Defense under the government of former President Michel Temer, replacing economist Roberto Castello Branco as President of Petrobras.

Brazil’s largest state-owned company has accumulated a loss of almost 100 billion reais (about 18 billion dollars) in market value between Friday and Monday.

The São Paulo Stock Exchange managed to operate with losses of more than 5 points, and ended the day with a devaluation of 4.76% of its main index, the Ibovespa. Petrobras preferred shares closed down 21.51%, while the dollar rose 1.31% in the face of growing mistrust of interference in the company.

Castello Branco, who will retain the presidency until March 20, when his term will end, is considered a kidney man of the Minister of the Economy, Paulo Guedes, and had management focused on liberalizing the company’s pricing policy to create an investment climate and reduce inherited debt.

The cumulative increases in fuel prices of around 30% in 2021 Driven by the rising dollar and the international price of a barrel of oil, they had aroused strong criticism from Bolsonaro.

Far from trying to calm the waters, the president justified the decision and fueled the possibility that the intervention in Petrobras could be followed by another in the electricity sector.

“Is the oil ours or is it from a small group in Brazil?” the president told his supporters outside the Palacio de la Alvorada, the official residence of Brasilia. The right-winger was not concerned about movements in the São Paulo stock exchange, which he described as “a sign that some members of the financial market are only happy with the policy of serving their own interests.”

Right-handed denied intending to change the company’s pricing policy, but at the same time he said, “There are things that need to be explained.” “I cannot understand, within two weeks, a price adjustment of 15%. I demand the transparency of who is my subordinate, ”assured the president.

Beyond the names and the intervention of the largest company in Brazil, the episode generated in the market a wave of mistrust of Guedes’ role in government, more and more vague, and, essentially, on the viability of the implementation of a liberal-type program.

Guedes, an economist trained in Chicago in the 1970s, often says that Brazil has been “corrupted by overspending” in past administrations, and has been working since he was appointed minister of cost control policy, privatization and liberalization of the economy. But one of his main obstacles has been, paradoxically, President Bolsonaro, who, although he has publicly stated that his minister has an absolute decision in the region, has vetoed several projects, usually ruling on decisions. .

“Bolsonaro will try the same policy that former president Dilma Rousseff implemented in the past and failed: not to pass on international fuel prices to consumers and finance them with Petrobras itself,” he said. he explains. THE NATION Gilberto Braga, economist and professor at Ibmec. “At first, it will have strong support from the people and industry which uses oil as a basic input, but in the long run the deficit will increase and the company will run out of money to invest.”

Bolsonaro faces declining popularity, almost two months after the end of emergency aid and with an average of coronavirus deaths of more than 1,000 in the past 30 days. According to a survey published yesterday by the MDA institute, his government’s negative assessment climbed eight points in four months to 35.5%. The positive image lost nearly nine over the same period and recorded 32.9% in the work carried out between February 18 and 20.

With the presidential election 2022 Closer and closer to the timetable, the decision to intervene Petrobras may mean the final abandonment of a liberal agenda in favor of populist measures that appeal to voters, Braga said. “Bolsonaro is just watching his re-election and Guedes has lost the internal struggle in the Planalto palace.”

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