The architect of Brazil's economic recovery and market-friendly fiscal policy has resigned after getting caught up in a political scandal with as many twists and turns as the country's renowned soap operas.
Finance Minister Antonio Palocci sent a resignation letter on Monday evening to President Luiz Inacio Lula da Silva and Silva accepted the resignation, said presidential spokesman Carlos Villanova.
Silva tapped former Planning and Budget Minister Guido Mantega to replace Palocci as head of the Finance Ministry. Mantega now heads Brazil's National Development Bank, and was a top Silva adviser along with Palocci during the 2002 campaign that made Silva the first elected leftist president of Latin America's largest economy.
Mantega told reporters he would stay the course on Brazil's orthodox monetary policy aimed at paying down debt and taming inflation.
Under the policy headed by Palocci to reverse boom and bust economic cycles and spark slow sustainable growth, "Brazil has become a country that is respected abroad," Mantega said.
Palocci faces accusations he frequented a house in Brasilia where lobbyists held parties with prostitutes and money arrived by the suitcase, possibly for political payoffs. He denies the accusations.
{{/usCountry}}Palocci faces accusations he frequented a house in Brasilia where lobbyists held parties with prostitutes and money arrived by the suitcase, possibly for political payoffs. He denies the accusations.
{{/usCountry}}The scandal was low-level until last week, when it turned into a political time bomb after bank records from the caretaker who placed Palocci at the house were leaked from the state-owned Caixa Economica Federal.