Brazil's New Finance Minister Continues Efforts to Attract Investors to Maintain Fiscal Policies

Brazil is trying its hardest to stay afloat amidst its unstable economy and a widespread corruption scandal that threatens Brazilian President Dilma Rousseff's political career.

Nelson Barbosa, the country's newest finance minister is not having a good first week. Barbosa received a rude reception as Brazil's recession deepens, Bloomberg reports. Financial markets plunged for a second session on Monday after the news had broke out that Barbosa would be replacing Joaquim Levy as Brazil's finance minister. Both Brazil's currency and the stock market fell more than 1 percent on Monday, which stretched the two-day losses to about 4 percent.

Barbosa might have gotten more than what he bargained for. Brazil's economy is shrinking at a 7 percent annual pace. The country's budget deficit has already swelled to its widest in twenty years. Congress is also bogged down with the current impeachment proceedings against Rousseff.

Since being appointed on Friday, Reuters reports that Barbosa has already sought to assure investors to continue their trust in the country. Barbosa has also promised to pursue Levy's belt-tightening drive to overcome the fiscal crisis that would cost Brazil its investment-grade rating.

Levy left the administration over public disagreements with Rousseff after they had argued over the size of next year's budget cuts. The former finance minister is known as an economic hawk in the country. Rousseff and the new finance minister are known to be allies. 

Barbosa took office on Monday and immediately took on one of the first items on his agenda, which was to pay the sum of 57 billion reais ($14.28 billion) in debts the government holds with state-run banks.

Barbosa said on Tuesday that there is no need to inject capital into Petroleo Brasileiro SA. New management is currently in the process of reviving its finances.

"I don't think it is necessary to inject capital in Petrobras. That is an extreme measure and we are far from that," Barbosa said. "I think market solutions are better solutions."

There has been pressure from market players to rescue the company, which has been the subject of a political scandal, as well as slumping world oil prices.

The report with Reuters said that Barbosa had said that the Brazilian government will repay those debts as "soon as possible." He added that they are considering issuing new paper or using the treasury's account at the central bank to pay back its debt.

"This is a government decision that will be done without impacting short-term interest rates or money markets," Barbosa said