RIO DE JANEIRO, Dec. 4 (UPI) -- A moderate economist is going to be appointed by the incoming leftist government to head the Central Bank, a Brazilian newspaper reported Wednesday.
The appointment of Pedro Bodin de Moraes would ease pressure on the future government of Luiz Inacio Lula da Silva, as it faces the possibility of rising inflation and a staggering $230 billion debt.
Foreign and domestic investors alike are anxiously awaiting word on who will shape Brazil's fiscal policy in the coming year.
The country must take deft action if it is to avoid becoming the largest sovereign default in world history, a title now held by neighboring Argentina.
The Folha de Sao Paulo newspaper, citing anonymous sources within da Silva's Workers' Party, reported on its Web site Wednesday that Bodin will be asked to lead the bank.
Bodin, the director of the medium-sized Banco Icatu in Rio de Janeiro, would have big shoes to fill.
Central Bank President Arminio Fraga, who has steered Brazil's monetary policy since the country devalued its currency in 1999, is widely respected within the international financial community.
Bodin is a personal friend of Fraga's, himself a former fund manager for George Soros. Bodin was previously an economist with the Central Bank during the scandal-mired presidency of Fernando Collor de Mello in the early 1990s.
What isn't clear is if Bodin will accept the position if it is offered by Lula, as the Brazilian president-elect is known.
Folha de Sao Paulo reports that Bodin has expressed great reluctance to take the post in his conversations with Lula's camp.
Bodin is reportedly concerned with being further exposed to legal actions taken against Central Bofficials, as he is still facing lawsuits filed by pubic prosecutors during his time at the bank.
Fraga has offered to stay on as bank president as late as March, should Lula's government need that much time to find a successor.
According to the newspaper report, keeping Fraga on for a short time is the preferred route of the head of Lula's transition team, Antonio Palocci. But the president of the Workers' Party, Jose Dirceu, is against such action.
Should Bodin decline the nomination, Folha reports that the next choice would be the economist Jose Julio Senna, a partner with MCM Consultores Associados, a consulting firm.
Senna, who has also worked for the Central Bank, has at times been critical of current economic policies, but looks to be a moderate choice who would make for a relatively smooth transition.
"Especially the action of monetary policy demands continuity," Senna, who holds a Ph.D. in economics from Johns Hopkins, told the business newspaper Valor last week in regard to the transition to Lula.
"The market needs to be convinced of the intolerance the new team will have for inflation -- intolerance as evident as that demonstrated by the government of Fernando Henrique Cardoso in the last years."
The official announcement of the next Central Bank president, along with other key ministerial posts, is expected on Thursday or Friday.