The longest-lived character in activity in Brazilian politics and economy, the economist Antonio Delfim Netto, 93 years old, observes an unprecedented scenario in the country under the government of Jair Bolsonaro: the melting of the macroeconomic pillars built since the Real Plan. Former Minister of Finance (1967-1974), Agriculture (1979) and Planning (1979-1985), he actively participated in the transition from the military regime and in the main economic plans – many of them failed – since redemocratization. In an interview with DINHEIRO, Delfim criticized the fiasco of Bolsonaro and Paulo Guedes in the management of Brazil. He is betting that an eventual new Lula government will not make the same mistakes as in the past.
DINHEIRO – What is your diagnosis for the economy under Bolsonaro’s administration?
ANTÔNIO DELFIM NETTO – I define it as pitiful and mediocre. On the economic side, the big problem is that the government of Jair Bolsonaro is a seesaw. In the first year, it grew 1%. In the second year, it dropped more than 4%. In the third year, it rose about 4%. And, in 2022, we will have a very close growth
to zero. With Bolsonaro, we have four years absolutely lost.
What is the most worrisome problem?
Difficult to choose just one. Inflation has worsened dramatically. He took the country with an inflation of around 4% and will deliver with an inflation of around 10%. The federal public debt now exceeds R$ 5.5 trillion and continues to grow. This is an immense burden for the country to carry and will be a major obstacle for the next government.
Where has the current government gone wrong the most?
The government does not have a well-armed project. Bolsonaro does not know where he is and where he wants to go. Policies have been random.
Do you like any names presented as an alternative to the presidency?
So far the presidential debate has been very poor. Nobody can present a real project for Brazil. Everyone is focused on small things, on personal interests, doling out promises and favors here and there. There is no project. I don’t see anyone who shows that we are at point A and we have to get to point B, and to get from one point to another we must do this and that.
Whatever the next government, is there any chance of saving the economy next year?
I very much doubt that any president will be able in 2023 to restore order to the economy and promote the recovery of the damages of the current government. The pandemic will continue. We had a very violent supply shock, which dismantled the entire production system. The new government will have the challenge of reorganizing our production system so that there is a strong, accelerated development with relative income distribution.
What are the risks to the economy in a scenario of populist measures in 2022?
I have difficulty understanding when they talk about populist or popular measures by this government. Bolsonaro is a party man. Its populist measures are always aimed at certain levels of activity. Police activity, truck drivers activity, military activities. These are not measures for the benefit of the majority of the population.
Couldn’t this cause an upheaval in the presidential race?
The president’s approval of certain groups is insufficient to change the electoral framework. I don’t think Bolsonaro has more room to maneuver his measures in an election year. It’s going to be a very complicated election, very disputed, but I don’t think he’s in a position to impose a populist policy that, let’s say, managed to win the vote of the majority of the population. He will get the vote of that minority that is his own. Thankfully, voters loyal to him are a minority.
Voting intention polls indicate that former President Lula has a chance of being elected in the first round. Is this good for the economy?
This is a very interesting point. The economist depends on politics. Not even the best economist in the world, who knows all the economic theories, will be able to manage well without having the power to do what he thinks to do. It doesn’t give any results. At this point, Lula has instruments to improve the economy. He made good government. So, if you manage to define the dispute in the first round, the political crisis that contaminates the economy must be resolved.
But part of today’s economic problems were created in the PT years…
Yes, and they were made worse by Bolsonaro. We cannot confuse the Lula government with the Dilma government. Lula did good for the economy. I only regret that the electoral framework is not richer. It was necessary to have a great discussion around a country project. It would be important for new participants to present themselves as an alternative to governing Brazil, to present alternative paths in such a way that society becomes better informed and votes better informed.
Does Brazil run the risk of having another lost decade, like the 1980s, caused by the mistakes of those military governments in which you were a part as Minister of Finance, Agriculture and Planning?
It is not possible to compare the Brazil of that time with the Brazil of today. The way the economy works is totally different. The country was going through a transition of government regimes, with the macroeconomy weakened and without the regulatory instruments that currently exist.
How does today’s inflation differ from the hyperinflation of almost 40 years ago?
The mechanisms are completely different. There is no more monetary correction. Inflation that fed itself was corrected in the Real Plan. This is a definite achievement. There is no going back anymore.
What is the responsibility of Minister Paulo Guedes in this mess that turned the economy?
Paulo is a good economist. He is a man who knows the Brazilian economy in depth. But Paulo, under the centralized command of Bolsonaro, is an Ipiranga gas station without fuel. It has no power really. He made a big mistake by lumping all the ministries into one and caused a world-wide mess. Nothing works in the economy. It’s all late. The number of errors is brutal. The government will end without being able to carry out a reform. All this is the fault of excessive centralization.
Was the biggest mistake centralizing power and losing the ability to articulate?
That was the biggest receipt. He lost control of the economy when he ended up with diversity and with the multiple views that one must have on the same problem. He attracted all the decision-making power to him and, when he lost that power, he handed everything over to the president, who knows nothing about economics.
The result…
The rest is history.
An eventual Lula government should bring back to the scene names like Aloisio Mercadante and Guido Mantega, who are not well regarded by a large part of the market due to the mistakes made in previous administrations. Who is worse, Guedes, Mercadante or Mantega?
What man has never made a mistake in the past? I say this because the return of the same names is no guarantee that the same mistakes will be made. So far, we don’t know what’s being talked about between them. Nobody has information about a possible new Lula government. In addition, Mantega is a good professional. The Merchant too. When the future is past, you discover all the mistakes you’ve made.
Is this statement a mea culpa?
No. I’m talking about PT errors.
Butter and Mercadante Errors?
We have no reason to imagine that if there were a new government, Mantega and Mercadante would be the ministers. I strongly believe that Lula is going to make a government of accommodation. Without this, Brazil will not go forward. Lula is a pragmatic being. If elected, I’m sure he’ll try to make a good government.
Try, everyone tries…
They try with planning, management, intelligence and articulation. This is not the case with the current government.
What is the biggest obstacle?
The answer is simple. Brazil is a prisoner of a high bureaucracy that has installed itself in power and that appropriates everything. Brazil belongs to civil servants. Full stop.
Should reforms promised and not implemented come out with the change of government?
This will depend on society’s ability to understand the congressional election. It’s no use having hope, it’s no use putting all your faith in a president, if the voter doesn’t realize that he needs to learn how to elect Congress. We need to have a parliament that is willing to carry out reforms. Otherwise, they won’t come out.
Human Rights Watch accused Bolsonaro of being a threat to Brazilian democracy. Does it really pose a risk?
The Human Richts should drown not to speak anymore. This entity is talking all the time. There is no risk to Brazilian democracy. Institutions are solid. The Armed Forces obey the Constitution. When Bolsonaro says ‘my army’, he’s playing for his voters. The Army is none of his business. The Army belongs to Brazil, it belongs to the Armed Forces, as well as the Navy and the Air Force. He went there just a captain.
Is there no risk?
Brazil has a consolidated democracy. And a Supreme who is increasingly playing his role, acquiring prestige and being sacralized by the military in the barracks. There is no possibility of intervention of any kind.
Bolsonaro and his followers are nostalgic for the period of military rule, of which you were a part. How to explain this?
This nostalgia is curious. Bolsonaro was punished by the authoritarian regime that he himself extols. was expelled from the army [na verdade, ele foi reformado e inocentado pela Justiça Militar]. His behavior is incompatible with military discipline. Bolsonaro likes to sell himself as a military man, but he is not, in fact, what he tries to show himself.
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