The Minister of Economy, Paulo Guedes, was the speaker at the first key session of the Brasil Investment Forum 2019, taking place in São Paulo on Thursday (10/11) and Friday (11/11). Guedes began his speech by presenting the pillars of economic policy and highlighted the Pension Reform as the “first pillar” for the resumption of sustainable economic growth.
“Sustainable growth, which is carried by the private sector, with credit and private flow, without public subsidies. There is no ‘chicken flight’ in the Brazilian economy, there is no artificial growth,” he said.
Guedes went on to say that it is necessary to transform the economy and “attack the fiscal imbalance and public spending – which has gone from 18 to 40% of GDP in recent years. Brazil was spending a lot and was spending badly. When we looked at the composition of spending, most of it was with Social Security. According to the minister, 94% of the expenses were obligatory and, therefore, it is necessary “to decarburise the resources and make the political class regain control over the public budget. This is the new policy in which there is dialogue and each region defines how to use its resources,” Guedes said.
The expenses to pay interest on the debt were pointed out as another problem of the Brazilian economy to be worked out: “this was our second largest expense and we were able to pay R$ 100 billion per year. That’s why we need to demobilize assets, rebalance public accounts and resume investments, which have already been up to 25% of GDP and have fallen to almost 1% in the last five years.
The minister reinforced initiatives in the area of infrastructure that will promote international trade in the coming years, such as agreements with Peru, to facilitate trade with China and “a cut through the North, through English Guyana, which could be an exit for our products through Roraima and entry of energy resources. In addition to new trade agreements with Mercosur and with the European Union and dialogues with Canada and South Korea. Also noteworthy are the debates on private investments in basic sanitation.
Reindustrialization of the economy with the use of cheap energy and simplification of taxes will lead to more jobs, according to Guedes. “To give you an idea, the burden on labor has caused almost 40 million people to be out of formal work. That’s why it’s necessary to clear the slate.
Finally, Guedes said that “as soon as the Social Security Reform is over, the Federative Pact and the first steps of the Tax Reform come in. The Tax Reform is very important, but we can’t do it with urgency and run the risk of going wrong. We will take the first conciliatory step towards the proposal that is already in the House” said the minister.