Economy Minister Paulo Guedes said on Friday that the last two years were the most difficult the economy has faced, but argued that Brazil is already on its feet after the 2021 recovery. He emphasized that the economy and the employment have already returned to the pre-pandemic level.
“In 2020, disease rose over the country, there was fear of hunger, depression, in addition to death. In 2020, the disease was strong and Brazil fell; in 2021, the country got back on its feet, the disease fell,” said the minister, at an end-of-the-year press conference. The ministry only allowed five questions from journalists.
Guedes cited the measures taken during the pandemic last year, but said that its effects were felt most in 2021. “It all borne fruit this year, when the economy picked up again. The synthesis of 2021 is that the predictions that Brazil would go wrong failed, the economy really came back in a V and grew 5% this year”, he repeated.
The Economy Minister said that the government has put Brazil on its feet, despite recognizing that the population is poorer because of inflation. “Some will say that Brazil is poorer. Yes, wars impoverish. The whole world got poorer. Inflation is also high in Germany, the United States and China. Is it the fault of the Bolsonaro government? Say that government A or B lost fewer jobs, but any other government faced the covid? So we can’t compare,” he said.
He argued that economic policies in all dimensions are paying off, and highlighted that tax revenue is growing month by month. “They say it’s because of inflation: a lie. Because we are breaking records in real terms (after discounting inflation), he claimed. When there is a little more inflation, there is also more GDP growth”, he highlighted. “We’ve created 3 million jobs since the bottom of the rock,” he repeated.
According to him, the economy is as it was on the day the covid-19 pandemic arrived in the country.
tax consolidation
The Economy Minister also emphasized that the government will maintain its commitment to fiscal consolidation. According to him, both the Union and the states and municipalities are now in a better fiscal situation than they were before the pandemic.
“Expenditures went from 19.5% of GDP in 2019, went to 26% of GDP with a pandemic in 2020 and will return to 19.5% of GDP. In 2020 and 2021 we honor our commitment to future generations. The war was fought, there was no lack of resources, and now spending is back to its previous level”, said Guedes. “Have all the states and municipalities improved their management or was there a federative pact working?”, he added.
He again criticized market projections that pointed to a gross debt at 100% of GDP when the result this year will be 80% of GDP. Guedes repeated that the primary deficit will return to 1% of GDP after reaching 10% of GDP last year. “With the campaigns being put in place, we started to see all the economists who were militating before”, he joked.
‘Fake news’
The Economy Minister also said that criticisms of the government about populism and fiscal irresponsibility are “Fake News”. He again cited the reduction of the primary deficit to argue that no country made a fiscal adjustment as robust as Brazil’s.
“With the exception of Singapore, no country has made a fiscal adjustment as robust as Brazil’s. It was our commitment that the health money would not come with a salary increase”, said Guedes.
He returned to using the 2021 balance sheet press conference to cite actions and measures taken by the government in 2020. “It is true that we were indebted a little more, but the states and municipalities have improved their results. Eleven states that were in red have returned to blue. We don’t let regional governments collapse for lack of resources,” he said.
He also recalled that the pandemic’s commitment not to readjust wages ends on December 31st.
Inflation
Although the Central Bank is already talking about a more persistent inflationary process, Economy Minister Paulo Guedes repeated that the assessment that inflation is temporary. “Proportionally, American and European inflation rose more than ours”, he argued. “There was inflation all over the world. All over the world, salaries, pensions and rents lost purchasing power and governments maintained social programs. But the production chains were dismantled, and this adverse supply shock took away income, jobs and brought inflation all over the world”, he added.
Once again, Guedes said the government “depoliticized the currency” to pass the Central Bank independence law. “This was the first delivery this year”, he classified. “If it’s true that inflation has gone up, is it our fault or covid’s? We made the BC independent”, he replied.
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