Brazil is doing well. President Bolsonaro is committed to the fiscal issue. The relationship with Congress is great. The economy will positively surprise the world. The contingency will be maintained in 2022. All these phrases said in the last few weeks by minister Paulo Guedes suggest that perhaps the economist’s gaze is not so aligned with the reality of the country. In this version of Brazil by Guedes, the spending impulses of the Executive and Legislative will be under control in an election year and, if it is not possible to avoid the expenses, there will be no lack of alternatives of recipes to pay for the leak. Within the four lines of his ministry, a war scheme is designed to avoid an “electoral spree”. Outside there, Bolsonaro and Congresso make it clear that the only one connected to this parallel reality is Guedes and his resilient troupe in Brasília.
In this protection scheme designed by Guedes, more important than choosing well the expenses that will be made with the additional R$ 106.2 billion from the PEC do Calote/Precatórios, is to reduce the chances of Congress approving new matters with high spending potential . According to a source close to the minister, he is fully aware of the president’s profile in this regard. “Bolsonaro is committed to the fiscal issue, but the political issue overlaps,” he said, on condition of anonymity.
In Bolsonaro’s list of attacks that the ministry will try to divert are the creation of a diesel voucher (demand from truck drivers) and the readjustment of “at least 1%” to servers, as the president said. For businessmen, the presidential promise is to water Banco do Brasil and Caixa with cheap credit. In Congress, the approval in the Senate of a new Fiscal Regularization Incentive Program (Refis) is a source of attention.
And it can even get worse, because the Chamber wants to make the terms for joining the Refis even more comprehensive. Another potential problem that is about to become a reality is the correction of the Personal Income Tax table, which, by making a larger layer of the population exempt, reduces revenue. The text is in Congress and should already be in effect next year. In a conversation with businessmen, Guedes stated that he understands that the election year requires efforts, but remains committed so that there is no waste. “We understand that from the election year, but we cannot leave a blank check,” he said. According to him, the collective movement with other Ministries and Powers has to be thought of from now on, in the construction of next year’s Budget.
700 properties currently held by the union enter the minister’s sales list. the (old) plan is to collect in an election year
DRINKING ICE For interlocutors, Bolsonaro has stated that the relationship with Paulo Guedes has improved in recent months, and that the minister is doing everything possible to boost the economy. In his office, Guedes looks for potential solutions that do not depend on Congress, does not harm the president’s image and maintains the narrative that everything will be fine in 2022. The first measure (old, spoken three years ago) underway for extra revenue involves the sale of real estate by the Union. On Wednesday (7), the ministry announced an auction of 88 in Minas Gerais, Rio de Janeiro and São Paulo. In all, Guedes listed 700 units that could leave the hands of the federal government. Other initiatives closely studied are the benefits and exemptions for some sectors of the production chain and agribusiness. The idea is to keep part of the exemptions and discounts for strategic sectors (such as defense and science), but gradually take some advantages understood as outdated, especially in polluting areas of industry and agriculture.
In the minister’s perfect world, it is possible to do all of this in 2022, and the icing on the cake would be to achieve at least one large-scale privatization: Eletrobras, Petrobras or Correios. With this combo, the public debt would come close to zero, a promise made in 2018, during the electoral campaign. The problem is to find those who believe in the sale of one of them in the middle of the campaign.
REAL WORLD And if the theory seems perfect in the virtual world, when Guedes takes off his augmented reality glasses, it’s a different story. And more problematic. In practice, Guedes’ week began with pressure from Congress to authorize payment of pending 2021 parliamentary amendments, or Congress would not vote on next year’s Budget. The minister also saw the approval of the return, by 2023, of the Tax Regime for Incentives for the Modernization and Expansion of the Port Structure (Reporto) and the payroll tax exemption to grow rather than decrease. The tax benefit for solar energy also came from Congress, with a subsidy until 2046.
Finally, the minister also had to hear his boss promise that he would fund the health plan for delegates, federal police and active and retired servants, in addition to increasing their respective salaries. A reality check, especially for those who live in the parallel world.
BYE BYE, BRAZIL
The International Monetary Fund (IMF) announced on Thursday (16) that it will leave Brazil. An exit that takes place amidst a barrage of criticism that the government, in particular the Economy Minister, Paulo Guedes, directs towards the international organization.
The departure from Brazil will take place in June 2022 and, according to a statement from the Ministry, it is because the IMF does not have any active program with Brazil, excluding the need for a local office. The last agreement with the Fund was ended in 2005, when the former president squid paid off the debt contracted in 1999. Since then, the presence has taken place for dialogue between the parties. But we know that dialogue is not the right word for the current government.
It’s easier to deny reality and drive away the critic. in the words of Chico Buarque, bye bye, Brazil, the last chip fell…
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