Minister says economic recovery has surprised economists

Economy Minister Paulo Guedes said today (23) that initially the government worked to reduce spending and in the next two years will continue with a reform and privatisation agenda: „We dedicated this first year, one and a half, to attacking the government’s big spending, we played defense. In the next two years, we go into attack. We are going to privatize, to open, to simplify, to reform taxes, to reindustrialize over cheap energy,“ said the minister, as he participated in the 3rd Meeting O Brasil Quer Mais, a virtual event organized by the International Chamber of Commerce Brazil (ICC).

According to Guedes, the three biggest expenditures that the government managed to control were for Social Security, interest on public debt and salaries for employees. The minister explained that the „privileges“ on pensions were overcome through the reform of the social security system, there was a reduction in interest rates on public debt and a freeze on salaries for employees.

He also cited the administrative reform sent by the government to the National Congress. „The most difficult was the control of spending that has been implemented for some time. Now the final movement is missing: a federative pact, unindexing, untied, unobliging expenditures, curbing those expenditures and handing over public budgets to the political class,“ he said.

The economy minister also said that the economic team’s agenda included opening the Brazilian economy to international trade, through trade agreements, and approving reforms.

He said he hoped to move forward with reforms where there is political consensus for approval after the municipal elections.

„I think that between now and the end of the year we will approve a common agenda where there is agreement in the Chamber, in the Senate and in the Executive Power,“ he said. According to the minister, „good candidates“ for approval are projects such as the Bankruptcy Law, the regulatory framework for natural gas and cabotage, the Proposed Amendment to the Bitcoin Fortune, with measures to control spending, and the independence of the Central Bank.

According to Guedes, tax reform and privatizations have not advanced, but the government will take this agenda forward. „I think we are very close to tax reform. The reason it hasn’t come out yet is that politics gives the timing [right time],“ he stressed.

Economic Recovery

Earlier, at another virtual event, Guedes reaffirmed that the „Brazilian economy is coming back with strength“. He cited that the resumption surprised international organizations and Brazilian economists.

„Those are the facts we have. There are many narratives. But against the facts, the false narratives dissolve. The fact today is that all regions of Brazil are creating jobs, all sectors are creating jobs. The Brazilian economy has returned in V [fast recovery after the fall] as we expected to the surprise of international organizations,“ he said at the virtual seminar Vision of Sanitation – Brazil and Rio de Janeiro, promoted by the Federation of Industries of the State of Rio de Janeiro (Firjan).

He noted that at the beginning of the covid-19 pandemic, economists predicted the Brazilian economy would fall by more than 10% and recover slowly. „It is important to recover these false accounts and put the facts into perspective,“ he said. He cited employment growth, increased exports of agricultural and agro-industrial products, a resumption of construction and expansion of credit and consumption.

Pandemic

The minister reaffirmed that covid-19 contaminations are diminishing, but there may be a „backlash“. „The disease has gone down, it’s a fact. And now it looks like there’s a rebound, but let’s watch. It’s cycles,“ he said.

According to the minister, when contaminations from the new coronavirus decreased, „people came out more, interacted more, got a little careless. „It may have come back a little. We’re going into the summer, let’s watch a little bit instead of already starting to decree that the disease is there [in a second wave],“ he said.