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By Bloomberg

Joaquim Levy, laboring to restore Brazil’s fiscal health, was recently likened to Jesus Christ by the nation’s vice president, Michel Temer.

Regardless of how outlandish the claim is, the finance minister is winning over traders in the credit market.

Since April, when lawmakers began debating Levy’s belt- tightening measures, Brazil’s perceived creditworthiness has improved faster than its regional peers as he persuades a divided Congress to approve spending cuts and tax increases.

While Levy’s austerity has earned him scorn among some members of the ruling party, the president and vice president have defended him for protecting Brazil’s investment grade. Levy’s efforts have reduced the cost of buying protection against a potential default in Brazil, according to Axel Christensen, Latin America chief investment strategist at BlackRock Inc.

The decline in the cost of credit-default swaps “reflects an inflection point in the perception about Brazil,” he wrote in an e-mail. “However, there is still much to go.”

The prices of five-year contracts have fallen more than Chile’s, while the perceived risk in owning bonds increased for Colombia, Mexico and Peru. In March, the Brazilian swaps soared to a six-year high as politicians and protesters came out in opposition to austerity proposals.

Brazil’s real weakened 0.2 percent Wednesday to 3.0949 per dollar as of 8:58 a.m. in New York.

Preventing Downgrade

Levy, who entered office in January pledging to try and prevent a second sovereign downgrade in Dilma Rousseff’s presidency, has in the last two months lobbied lawmakers to pass measures designed to produce a budget surplus before interest payments, following a deficit last year. Congress in late May approved three of his measures to raise taxes and cut spending.

“Precisely because of the fiscal adjustment -- albeit modest, nothing radical -- we managed to avert the risk of downgrade,” he told business executives in Sao Paulo on June 12.

The lower house this week is scheduled to vote on the final piece of legislation in Levy’s belt-tightening package before sending it to the Senate. The proposal would boost corporate taxes.

Some members of the ruling Workers’ Party, including senators Paulo Paim and Lindbergh Farias, have criticized the minister for pushing bills that cap labor benefits amid rising unemployment.

‘Like Christ’

Before a party meeting in Bahia state last week, Rousseff said Levy shouldn’t be cast as a Judas. Temer went as far as to say that Levy “has to be treated like Christ, who suffered a lot.”

Yet work remains for Levy. Brazil’s budget deficit as a percentage of gross domestic product in April expanded to the widest since 1998 following an economic contraction in the first quarter. The gap doesn’t include payments on interest.

“The fiscal is still ugly,” Kathryn Rooney Vera at Bulltick Global Markets said from New York. “This past month was a really important sense of what Congress is going to pass, but the market has to see a turn in the next few months.”

Former central bank director Paulo Vieira da Cunha says that Levy still deserves the credit for improving investor perception of Brazil in the default-swaps market.

“What it’s reflecting is that this year, you won’t get a downgrade,” said Da Cunha, who now runs macroeconomic research at hedge fund ICE Canyon. “That is mainly because of Levy.”