Bolsonaro government leaves privatizations, Auxílio Brasil, Pix and incentive to entrepreneurship as a legacy in the economy

After four years, the Bolsonaro government comes to an end. However, for its liberal criteria, it leaves significant legacies for the country and Brazilians in the economic issue.

It was during the administration of President Jair Bolsonaro (PL, right) that impacting changes were executed, from the reduction of the public machine, in the downsizing of ministries, as well as the decrease of State interventionism in national state companies, legislative reforms, application of asset sale or privatization plans.

Check below ten significant economic advances promoted in the last four years.

PRIVATIZATION OF ELETROBRAS

The Bolsonaro government opted to capitalize on the country’s largest energy company by offering its shares on the stock exchange and, consequently, ceasing to be its controlling shareholder.

Despite the newly elected government’s speech that it intends to undo the sales, a contractual clause should prevent this since the government would have to pay up to three times what the shares are worth to repurchase them.

Privatization has moved R$33.7 (US$6.5) billion and should move even more than R$30 billion in the next few years.

PENSION REFORM

With the country getting older, the reform was necessary to ease the burden on the Brazilian Social Security system and to allow the worker’s production and contribution time to be reduced before retirement.

The measure changed the calculation of the retirement amount. Previously, the average of the 80% highest contribution salaries was granted.

As of the reform, the average of all salaries multiplied by a reducer of 60% + 2% per year of the contribution that exceeds 20 years for men and 15 years for women.

PETROBRAS’ INTERNATIONAL PRICE PARITY POLICY (PPI)

With the government interfering less and less in its state-owned companies, Brazil’s biggest oil company started pricing fuel in Brazil based on market rules, considering the price of a barrel of Brent oil and the dollar rate.

The policy led the state-owned company to record profits: R$44.6 billion in the first quarter and R$54.3 billion in the second quarter.

SINGLE TAX RATE AND LIMIT FOR ICMS ON FUELS

With Russia’s war in Ukraine and the consequent rise in the price of oil and the dollar, which directly impacted the increase in gasoline prices in Brazil, the government reduced the state tax on goods and services (ICMS) on essential products such as fuel, telecommunications, and transportation.

The stimulated rate as a limit was each state’s minimum, ranging from 17% to 18%. The measure contributed to a significant reduction in fuel prices in the country.

AIRPORT AUCTION ROUNDS

By August of this year, 59 federal airports were privatized in Brazil. Thus, the private sector became responsible for 90.4% of the Brazilian air terminals. The National Confederation of Industry (CNI) considers the situation an advance for the Brazilian infrastructure.

The auction model applied by the government was to join groups of airports in which large and very profitable terminals were together with smaller ones that received less investment and attention from the private sector.

The objective was to provide profit to the entrepreneurs but also, at the same time, investment and increase in Brazilian air capacity.

DIVESTMENT PLANS

Besides Eletrobras, the government has started several divestment plans, selling assets and shares of other state-owned companies, such as Petrobras.

The intention is to reduce the public machine and increase private participation in businesses to increase competition in the Brazilian domestic market.

From 2019 to 2021, the government would reach R$200 billion with the sale of shares of its state-owned companies.

BOLSA FAMILIA BECOMES AUXILIO BRASIL

President Jair Bolsonaro has sanctioned a law that created the Auxílio Brasil, a cash transfer program previously called Bolsa Família, but which received new rules and was financially boosted.

Among the novelties, a minimum amount of R$400 is stipulated for the beneficiaries, people in socioeconomic vulnerability.

Moreover, unlike the previous structure, when the beneficiary gets a job with a formal contract, they will not stop receiving the benefit until a period of stability in the new job is completed.

The citizen also receives a bonus for getting a job. The intention is to stimulate the search for employment and financial stability, providing economic improvement.

CENTRAL BANK AUTONOMY

With the presidency of the Central Bank acting autonomously and independently, without direct interference, the Bolsonaro government allowed changes in the Selic and interest rates, which were made to try to ensure price stability for products in the Brazilian domestic market.

The Central Bank’s actions also aimed to ensure the stability and efficiency of the financial system, smoothing out fluctuations in the level of economic activity and fostering employment.

Under the autonomous regime, the monetary authority created the Pix, an accessible mechanism for transferring money to banking institutions and paying bills that have won the taste of Brazilians.

MP OF ECONOMIC FREEDOM

The measure reduced the bureaucracy to open companies in Brazil, especially micro and small ones, to leverage entrepreneurship.

Among the main changes, the law relaxes labor rules, such as waiving the need to register time and attendance for companies with up to 20 employees and eliminating permits for low-risk activities.

The text also separates the assets of company partners from the debts of a legal entity. It prohibits corporate holdings of the same group from being used to pay a company’s debts. The measure also put an end to the e-social.

APPROACHING OPEC

During the administration of Paulo Guedes at the Ministry of Economy, Brazil got closer to the Organization of Petroleum Producing Countries (OPEC).

Owning almost 80% of the world’s oil reserves, the group prioritizes ensuring higher profit margins for its member countries, even if to the detriment of other countries around the globe.

Brazil has been pleading to join the bloc to strengthen its international position and trade.

With information from Jovem Pan