Brazil president reshuffles cabinet to avert disaster

Brasilia: Brazilian President Dilma Rousseff has announced a major government reshuffle, axing eight ministries in a cost-cutting measure that also aims to end political paralysis and threats of impeachment.

At a time of recession, a massive corruption scandal and political instability, Rousseff yesterday said the shakeup would help put the world's seventh biggest economy and Latin America's biggest country back on track.

The reshuffle aims "to guarantee the political stability of the country which is needed to renew growth and strengthen relations between the parties and members of parliament who support the government," Rousseff, 67, said in the capital Brasilia.

Rousseff, who was narrowly elected last year to a second term, has already turned into a lameduck president, struggling to pass budget cuts and tax increases that her government says are necessary to help the floundering economy recover.

With the corruption scandal centred on state oil company Petrobras badly tainting Rousseff's Workers' Party, the president has seen her popularity ratings sink to 10 per cent and faced impeachment threats even from within her unruly coalition government.

The government shakeup appeared aimed at shoring up that fraying power base.

"Coalition governments need support from Congress. We live in a democracy," she said.

"It's Congress, elected by the Brazilian people, that my government must have a dialogue with on getting support for ways and laws to speed up the exit from the crisis."

Not that the opposition was impressed.

"The reforms deepen the government's lack of credibility.

It's a scheme for trying to escape impeachment," said Senator Cassio Lima from the PSDB, which despite also being leftist is opposed to Rousseff's Workers' Party.

The changes cut number of ministries from 39 to 31 in Brazil's sprawling bureaucracy.

"Today, we are making a first and major step toward the reorganisation of the federal public administration. We are beginning by reducing eight ministries," Rousseff announced.

A big winner in the reshuffle was the center-right PMDB, which is Rousseff's most powerful, but not always reliable, partner in the ruling coalition.

Analysts said Rousseff boosted the PMDB's ministerial portfolio in hopes of winning support for economic reforms that have come under heavy criticism since she unveiled them a month ago.

They include spending cuts and the reinstatement of an unpopular tax on banking transactions.

Rousseff said what Brazil needs is political stability so that it can pursue the common goal of restoring economic growth.