Petrobras received a wash on the Sao Paulo Stock Exchange on Monday, the appointment at the head of the public oil group of a reserve general by Brazilian President Jair Bolsonaro having heightened fears of Brasilia’s interference in the economy.
Petrobras lost nearly 20% at midday, both common stocks and preferred securities, while the Ibovespa index fell 4.5% and the Brazilian real fell 2.6% against the dollar.
The reason for this fall: the non-renewal of the president of Petrobras, Roberto Castello Branco, whom Mr. Bolsonaro blames for the successive increases in fuel prices (+ 35% since the beginning of the year).
The Head of State also criticized the fact that Mr. Castello Branco has been teleworking since the start of a coronavirus pandemic that he himself has continued to minimize: “he has been at home for 11 months , without working”.
In his place, he appointed a reserve general, Joaquim Silva e Luna, ex-defense minister, whose name has yet to be approved by the group’s board of directors on Tuesday.
“Authoritarian impulse”, “military intervention”: criticism has erupted in the editorials of the main Brazilian newspapers, while many analysts fear that this untimely change in the head of the oil giant could seriously damage Brazil’s credibility with foreign investors .
– Other changes to come –
But the far-right president did not seem too worried about the plunge in the share price of the largest public company in the country, preferring to stigmatize the business community who nevertheless helped to get him elected at the end of 2018.
“This shows that some people linked to the financial markets are very satisfied with a policy of Petrobras which had only one goal: to serve the interests of certain groups in Brazil,” he said Monday in front of supporters in leaving his official residence in the Alvorada Palace.
“Is the oil ours or a small group of Brazilians?” He asked.
These remarks show a 180 degree turn compared to the campaign promises of President Bolsonaro, who had appointed the ultra-liberal Paulo Guedes to the Ministry of the Economy.
Mr. Castello Branco is a “Chicago Boy”, like Minister Guedes, who seems to be losing more and more control of the country’s economic policy.
And more thunderclaps are expected in the coming days. On Saturday, Jair Bolsonaro warned that there would be “other changes” in state-owned companies this week, citing the case of “electric power” as an example.
The shares of the public electricity company Eletrobras, whose privatization has been envisaged for several years, fell by nearly 7% on Monday at the opening.
– “Demagogic reaction” –
“With the change at the head of Petrobras, the government has clearly shown interference because Bolsonaro is against the systematic increase in fuel prices,” Alex Agostini of the Austin Ratings consultancy firm told AFP.
Jair Bolsonaro, whose popularity has declined, “has the next presidential election” in mind in 2022.
The last time a government intervened on prices was under the presidency of Dilma Rousseff (2011-2016), a left-wing leader hated by Jair Bolsonaro.
This policy of freezing prices despite the rise in the barrel had contributed to the enormous financial difficulties experienced by the company, aggravated by the gigantic corruption scandal brought to light by the Lava Jato (Express washing) investigation, which has just been buried.
Petrobras has started to resurface in recent years, reducing its debt through asset divestitures.
In an editorial, the daily Folha de S. Paulo on Monday described the interference of Mr. Bolsonaro as “a demagogic reaction to these price increases which hamper his trucker allies”, in reference to the threat of a strike by the truck drivers, who had paralyzed the country in 2018.
But for Miriam Leitao, columnist for the daily O Globo, the fact of “attacking the governance of Petrobras to control prices will not satisfy anyone, not even the truck drivers”.
“Jair Bolsonaro has become an enemy of economic liberalism and has collapsed the price of Petrobras, but it is recoverable. The most expensive good that Bolsonaro threatens is democracy,” she concludes.
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