* Mantega agrees to stay on at Rousseff’s request - source
* Official announcement may not come for a few days
* Rousseff may ask central bank chief to stay on initially (Adds details on Mantega in paragraphs 9-10)
BRASILIA, Nov 18 (Reuters) - Brazilian Finance Minister Guido Mantega accepted an invitation by president-elect Dilma Rousseff to stay on as finance minister, a source with direct knowledge of the decision told Reuters on Thursday.
Rousseff’s decision to keep Mantega would be the latest sign that she does not intend to stray far from the economic policies of her predecessor and political benefactor President Luiz Inacio Lula da Silva, who leaves office on Jan. 1.
Those policies have helped Brazil enjoy its biggest economic boom in almost three decades while also boosting the country’s clout in global forums such as the G20 group, where Mantega has emerged as an influential voice.
The choice dovetails with widespread speculation in financial markets and political circles that Rousseff would leave Mantega in his post as a way of easing concerns among investors worried about any abrupt changes in economic policy.
But even if there is no changing of the guard at the finance ministry, some analysts believe that Rousseff will look to put her own stamp on economic policy and that some changes may be on the horizon.
“Continuity of people doesn’t necessarily mean continuity of policies. And the continuation of the current policies is not enough to take Brazil to the next stage,” said Pablo Goldberg, a strategist with HSBC in New York.
Folha de S.Paulo newspaper reported on Thursday that Rousseff is also weighing asking Henrique Meirelles to stay on temporarily and that she will likely wait to announce her economic team until she picks someone for the central bank.
Both the finance ministry and the central bank declined to comment.
The choice of Mantega may have been a missed opportunity for Rousseff to appoint a more fiscally credible person in the finance ministry, analysts said. The government’s expansionary fiscal policy during an election year in 2010 has come under criticism, pressuring public accounts despite a rebound in tax revenues.
Mantega, a close Lula lieutenant who advised him on economic policy from 1993 to 2002, is known for advocating increased development spending in Brazil. Before his post as finance minister, he worked as the planning minister and as the head of state development BNDES.
Lula has reportedly lobbied on the behalf of Mantega and Meirelles, arguing that it would help ensure a smooth transition period at a time of global economic uncertainty.
Speculation over Rousseff’s possible cabinet has been rife as investors look for reassurances that the new administration will rein in public spending and move ahead with long-sought structural reforms aimed at ensuring the economy can keep growing at a fast pace. For more on the names under consideration see [ID:nN10169667].
Mantega, 61, has overseen Brazil’s economic boom in recent years, with the economy now growing at robust rates that make it the envy of many still-struggling developed nations.
Throughout his more than four years as finance minister, Mantega has clashed with the central bank over the level of Brazil’s interest rate and confounded analysts and investors with a more interventionist stance on the economy that was championed by many in the ruling Workers’ Party.
He has also presided over a steep increase in government spending and a deterioration of public finances, prompting some investors to wonder if he is committed to the fiscal discipline and economic reforms that many say Brazil needs to sustain its brisk expansion.
“Mantega is not the same combative minister who in 2006 took office and clashed right away with the central bank. He has learned and is more mature, and could give markets a surprise,” said Jose Francisco Lima Goncalves, chief economist at Banco Fator in Sao Paulo.
“My perception is that he is conscious of the need for some prudence in the fiscal area,” he added. “Mantega won’t open the faucets as he did during this election year.”
A well-placed official in Rousseff’s Workers’ Party told Reuters she plans to officially announce her choice for finance minister by the end of the month. The rest of the cabinet would likely be unveiled by Dec. 15, the source added.
Record-low interest rates in the United States, Japan and other developed economies have caused an avalanche of dollars into emerging economies like Brazil, propping up currencies like the Brazilian real BRBY and causing what Mantega dubbed an “international currency war.”
Frustrated with the flow of hot money into Brazil, Mantega raised taxes on capital inflows and lambasted the U.S. Federal Reserve’s new quantitative easing policy, calling it dubious.
Meirelles faces more resistance within the Workers’ Party than Mantega, meaning the chances of a change at the central bank are greater than in the finance ministry, said the party source, who spoke on condition of anonymity. (Reporting by Ana Nicolaci da Costa, Leonardo Goy and Isabel Versiani in Brasilia and Luciana Lopez, Carmen Munari and Elzio Barreto in Sao Paulo; Editing by Kenneth Barry)