The trillion saga by Paulo Guedes – ISTOÉ DINHEIRO

The Minister of Economy, Paulo Guedes, hurts since the 2018 election campaign what quantum physics calls the Schrödinger paradox. This is an experiment from the first half of the 20th century, in which the Austrian Erwin Schrödinger puts a cat inside a closed box. Being there, and without the physicist being able to see if he was alive or not, the animal was in a paradoxical state of being alive and dead, that is, until the box is opened, it is not possible to define a situation. In Guedes’ epic, it is not a cat, but a figure: R$ 1 trillion. This number has permeated the minister’s speeches for years, and in the analogy of the Schrödinger paradox, it is as if Guedes tried to guarantee that this money exists, but even before opening the safe to prove it.

“In Brazil, the fetish of the treasury cipher only serves to please the president and public opinion in an election year” Cícero Mtias, economist at the University of Chile

This trillion so desired by Guedes has already appeared in different boxes. Sale of Union properties, reduction of pension expenses, review of the size of the State. All this would raise a value that would be the envy of any previous government. But it didn’t. Now, in the last year of government, with an empty agenda, losing confidence from the market and from his peers in politics, the last card is to seek the trillion in another box. This time, from the private sector through investments that will be made as far as the eye can see. According to the minister, R$ 800 billion have already been contracted and another R$ 300 billion through sales, concessions and auctions. “Do not believe that Brazil will not grow. They are wrong saying that we are not going to grow this year”, said Guedes. According to the minister, this resource will come from several sectors, but the main ones are telecommunications, oil, natural gas, cabotage and basic sanitation.

But behind much of that money is another name. Tarcísio de Freitas, the Minister of Infrastructure. Within the Bolsonaro government, and outside the wings of Guedes, the portfolio led by Freitas (who has already been in the Dilma government and later in the Temer government) seems to be the only one capable of accounting for Guedes’ magic cipher. The problem, for the commander of the economy, is that, in addition to the resource not being the merit of his economic team, it is not money that will be seen in the near horizon. It is as if the cat in the box has not yet been born, and the observer has to wait for decades to be able to verify if he is alive or not.

The fallacy of contracted investment and billionaire figures is not new. In 2015, to revive the economy, the Dilma Rousseff government presented the Logistics Investment Program (PIL), which promised R$ 280 billion in investments over 30 years. It was added to the old Growth Acceleration Program (PAC), which in the same year foresaw investments in the order of R$ 400 billion. All this without calculating the inflation for the period. Anyway, the result of all these numbers is there: airport concessions with billion-dollar contracts being returned to the State; highways filing a lawsuit in the Federal Supreme Court claiming that the projects presented had methodological problems that distorted the demand; accusations of fraud and investigations blocking contracts at the Federal Court of Auditors…
In 2016, Michel Temer launched Ponte Para o Futuro. The same PIL, but with a less leonine contract for the government and flexible for entrepreneurs. Another R$ 120 billion was expected in concessions and asset sales.

“The concessions involve huge amounts, which will take decades to be applied, and most of them will not even be fully implemented” Erico Heck Barroso, one of the creators of the PAC

But with the economic instability, no major contracts were signed. Some of them were even left for the Bolsonaro government to celebrate. In an even milder version and with fewer requirements and counterparts, a large part of the concessions signed in this government use the structure and dynamics dictated by the predecessors.

Érico Heck Barroso, economist who was involved in the development of the PAC during the Lula government, explains that the speeches of Dilma, Temer and Bolsonaro regarding the contracting of investments are more psychological than effective. “These are huge figures that will take decades to apply and a good part of it has a real chance of not being carried out”, he said. In his opinion, programs like the PAC required the government to invest as well, which is easier to control and make the economy spin than it is now. For the State, another counterpart would be to stop having an expense with an asset that will no longer demand money. At least until page two. “There is not much transparency in the public accounts on how this reduction in spending takes place and where the savings are directed”, according to him, in general, the return ends up being lost within the sector itself.

NOT WORTH ANYTHING? For Cícero Matias, a doctor in public policy and professor of economics at the Universidad de Chile, Paulo Guedes has tried to deflect a problem using a little manipulation. “It is one thing for you to reduce the state payroll by R$ 1 trillion in 30 years. These are practical reductions, despite being long-term, they have direct implications for the present,” he said. According to him, when it comes to private investment, it is an important vector for the country’s development, but for the government only the value of the grant is left, and the return to the State is secondary, if not null.

“But using this figure has become a weapon for governments that are having trouble making efficient decisions, whether through mismanagement or political inability.” Chile, Argentina and Uruguay went through exactly the same processes and had important development leaps, but they did not solve the State’s problems “The solution for Latin American governments is the search for a smaller State. More efficient and supervisory. May you waste less.” To get there, Matias suggests that two fronts of action be created: concessions and reduction of the State. At the same time, but with completely different focuses and objectives. “In the case of Brazil, this fetish of Guedes’ trillion serves only to please the president and public opinion. It has no practical value.” The targets could be much smaller, as long as they were accompanied by fiscal perspectives of reducing the weight of the State. “This is the leap of the cat”, stated Matias. This cat, in Guedes’ case, remains inside the box and, during the next decades, its only state will be undead.