Brazil's Lula replaces ministers to bolster congressional support

Brazil’s President Luiz Inácio Lula da Silva replaced two ministers in an attempt to obtain congressional support for the government agenda.

Sports minister Ana Moser will be replaced by André Fufuca of right-wing PP party and ports and airports minister Márcio França by Silvio Costa Filho of also right-wing Republicanos party.  

PP and Republicanos are part of the so-called Centrão block, which supports the government in power only under certain conditions.

"Lula’s administration has important [plans] that depend on broad approval in congress, which is the final approval of the tax reform and other measures the government wants to implement to increase some taxes and get money for its social programs in the coming years, so it needs to attract the support of these parties in Centrão," Mário Sérgio Lima, senior political analyst at Medley Global Advisors, told BNamericas.

The administration is also planning offering key posts at state bank Caixa Econômica Federal to centrist parties. The bank is a major focus of political interest due to its size and activity in key areas, such as infrastructure and water services.

"This is a somewhat risky gamble by Lula, because we have to consider that he has been in office for less than a year and already needs to hand over key posts to gain support in congress," said Lima.

Although Lula’s public approval rating is rising amid an improving economy, his administration is struggling to obtain support from a Centrão-dominated congress.

PORT PRIVATIZATIONS

The changes revived hopes among the business sector that port privatizations could resume. Investors are especially keen on the country's largest port in Santos, São Paulo state.

Lula’s predecessor, Jair Bolsonaro, pursued a comprehensive port privatization strategy, but once the new government assumed in January, any processes were put on hold, with França a major opponent of selling the assets.

Costa Filho, meanwhile, is a member of the same party as São Paulo’s governor, Tarcísio de Freitas, who was infrastructure minister during the Bolsonaro administration and is in favor of port privatizations.

De Freitas has repeatedly tried to convince Lula of the benefits of a Santos privatization.

"It makes sense that speculations increase in relation to the privatization of ports, due to the change of minister. However, I think it is unlikely that these privatizations will advance, because Lula's ruling party is against the privatization agenda. I think the most we'll have in relation to ports are concession contracts and PPPs for some services, but not full privatization," said Lima.