Brasilia, Dec 19 (IANS): In a major cabinet reshuffle, Brazilian President Dilma Rousseff has replaced the country's Finance Minister Joaquim Levy with Nelson Barbosa, the current minister of planning, the government announced on Friday.

In a press conference here, Barbosa said that he would take over the position at once, stating that the "financial challenge is our toughest challenge", Xinhua reported.

He added that he would take immediate actions to strengthen the real against the US dollar and to reduce inflation.

Doubts had been circulating about Levy's position for months as he reportedly clashed with Rousseff about budget controls.

Levy was called to Brasilia on Friday morning to provide a breakdown of his work but left the meeting without answering questions from the press. According to the latest estimates, Brazil will end 2015 with a 2 percent fiscal deficit and a GDP contraction of at least 3.6 percent, its worst performance in 25 years.

Levy's exit comes just 24 hours after the Fitch ratings agency downgraded Brazil's rating to junk status.