BRASILIA (Reuters) – Brazilian President Jair Bolsonaro on Monday fired one of his most senior aides and cabinet members, Gustavo Bebianno, amid a scandal involving campaign financing for some of his partys congressional candidates.
President of the Social Liberal Party (PSL) Gustavo Bebianno arrives at Albert Einstein hospital where presidential candidate Jair Bolsonaro is hospitalized in Sao Paulo, Brazil September 29, 2018. Picture taken September 29, 2018. REUTERS/Amanda Perobelli
Bebianno was secretary general of the presidents office. His departure punctuated Bolsonaros first cabinet crisis since he took office on Jan. 1 and has cast a shadow over the young governments plans.
Brazilian markets fell on Monday as investors feared that the brewing scandal could hurt Bolsonaros ability to pass a pension overhaul seen as key to fiscal and economic recovery.
In a short video clip released late on Monday, Bolsonaro said he took the decision to dismiss Bebianno due to differences of opinion on important issues, although he did not elaborate.
Bebianno, who helped coordinate government affairs and was acting president of Bolsonaros right-wing Social Liberal Party for the election campaign last year, denies any wrongdoing.
Analysts at Eurasia Group said in a note on Monday, before Bebianno was dismissed, that the scandal is unlikely to dent Bolsonaros approval ratings. Despite the dubious optics, the president can claim to be taking a tough stand against an aide accused of illicit activity.
But the timing could not be worse. Days before unveiling its landmark pension reform proposal, the government is mired in scandal, even if it is one that probably will not have much lasting impact on the administration or pension reform.
It is indicative, however, of a political team in disarray, they wrote, adding that everything points to an end result that will probably lead to the approval of a less ambitious version of the governments proposal for pension reform.
The scandal is denting investor sentiment, which had brightened last week after early details of Bolsonaros social security reform proposals were released. The full package will be presented to senior lawmakers on Wednesday.
Brazils Bovespa stock market fell 1 percent on Monday, the dollar rose almost 1 percent to 3.7350 reais and January 2020 interest rates rose two basis points to 6.39 percent.
Last week, the Bovespa rose 2.3 percent, within touching distance of its record-high 98,588. Interest rates fell 15 basis points, the biggest weekly drop in two months, and the real also rose..
The Bebianno scandal got personal after one of Bolsonaros sons branded him a liar on Twitter, putting pressure on the president to dismiss him just weeks into his term.
Reporting by Jamie McGeever and Ricardo Brito; Writing by Jamie McGeever and Anthony Boadle; Editing by Dan Grebler
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