RIO DE JANEIRO, BRAZIL – On Tuesday, June 16th, Economy Minister Paulo Guedes stated that the Covid-19 pandemic is like a “biological bomb” that has led the country to an acute situation of fiscal emergency.
“The pandemic is the real black swan, it is a biological bomb. The public calamity produced a particularly acute case of fiscal emergency,” he said in a videoconference organized by the Institute for Penal Guarantee (IGP).
The Minister further estimated that Brazil will be in a new stage by November, with a good year from then on. “I think by September, October, November, we will be a new country, with a very good new year ahead. I believe that we will fight for it – morning, afternoon, and night we are fighting for it and I believe that we will make it”, he said.
Guedes advocated the inclusion of a clause in the proposed New Federative Pact for the main governmental branches to meet weekly in situations of public calamity such as this.
Still on the proposal for a new pact, Guedes said that had the funds raised already been decentralized to states and municipalities, the public sector’s response to the pandemic could have been swifter.
Guedes also assessed that the central government cannot be called upon to cover all regional government accounts. Despite the federal government’s R$60 billion financial aid to states and municipalities, several government officials claim that their resources will be insufficient to cover the loss of revenues caused by the Covid-19 pandemic.
“The federal government is a widow who cannot be exploited by all. Pushing all bills towards the federal government is a cowardly approach of this generation with children and grandchildren,” he said. “But we will overcome both the health and the economic crisis. We will proceed with our reforms and the economy will be impressive,” he added.
In a lecture on “The Reflections of Judicial Decisions on Economic Policy,” Guedes also criticized the “unimaginable” volume of disputes between the federal government and the private sector.
“There are court cases contesting in excess of R$1 trillion in taxes. In other words, we have a tax insane asylum. Those with a lot of political influence are able to get exemption in Brasília, those with financial resources pay attorneys and challenge the collection in court,” he said. “We need legal and tax relief,” he said.
More about the Federative Pact
The Minister reiterated the need to pass the New Federative Pact bill submitted by the government to Congress just last year. “The need for a New Federative Pact is very clear. Relations between the federal,, state and local bodies are strained. There are many liabilities,” he said.
Guedes mentioned a court ruling that could force the federal government to file appeals regarding the Kandir Law in 48 hours, which ultimately resulted in a government agreement with the Federal Supreme Court (STF) and the states on the law.
“A 20-year-old litigation has been contemplated. We’ve been reaching many agreements that were skeletons in the closet. Chief Justice Dias Toffoli has been avoiding explosive agendas,” he said.
The Minister also criticized the performance of some State Audit Courts (TCEs) that, according to him, fail to comply with the federal Court of Auditors’ (TCU) best practices and ultimately approve the accounts of governors who leave shortfalls to their successors.
Source: InfoMoney