RIO DE JANEIRO, BRAZIL – The primary fiscal impact of the Brazilian program to assist the economy due to the crisis triggered by the Covid-19 pandemic amounts to almost ten percent of the Gross Domestic Product (GDP), but the measures help to mitigate the negative impact on the growth of local activity.
These were some of the observations made by Brazil during the financial meeting of the 20 largest economies in the world (G20), which was held online yesterday under the chairmanship of Saudi Arabia. The rate is higher than the average of 5.8 percent of advanced economies and 4.1 percent of developing countries, according to the government.
During the meeting, Brazil also stated that it will not tolerate violations of local sustainability laws, but also that it will not give in to protectionist pressures.
The Brazilian representative for the Ministry of Economy was Erivaldo Gomes, Secretary of International Economic Affairs. The Central Bank was represented by Fernanda Nechio, director of the institution’s international area. Minister Paulo Guedes was expected to attend the meeting, but there was a last-minute change of plans because of the forthcoming presentation of the tax reform proposal to Congress – the Minister pledged to forward the bill on Tuesday. He attended the April meeting but did not travel to Fukuoka in 2019 for the event.
There is no doubt for the government that Brazil’s responses are mitigating the economic impact of Covid-19. “Now, rather than a nine percent decline in GDP as projected by the IMF (International Monetary Fund), we expect about five percent,” the secretary noted, stressing that the pandemic has interrupted the upward trend observed in Brazil. The most recent estimate by the Ministry of Economy is for a 4.7 percent drop.
“The global outlook remains highly uncertain, as many countries are facing the consequences of Covid-19. Although economic activity and confidence have begun to rebound from very low levels, production should perform below expectations for a prolonged period,” Gomes said.
“Now the pandemic requires a new set of public policy actions,” he continued on global as well as domestic actions.
On internal actions, he told the group that Brazil has adopted a comprehensive package of measures to address the main challenges to healthcare, employment, and income. “In this effort, we have decentralized significant resources to states and municipalities so as not to leave anyone behind,” explained the Secretary.
He said emergency aid reaches approximately one-third of the Brazilian population, some 64 million people. “We have included over 38 million casual and socially vulnerable workers to be linked to our social programs henceforth.”
Other measures mentioned were the Employment and Income Maintenance Program, which saved over 13 million formal jobs, according to Gomes, and the government fund to improve credit channels and provide loan guarantees for Small and Medium-Sized Companies, with a potential benefit to 3.2 million businesses.
Environment
For the future, Gomes said the Brazilian government is preparing to act on four main principles to improve resilience and promote growth: implementing structural reforms and investments in infrastructure, strengthening social protection and job creation, promoting Brazil’s deeper integration into the global economy and commitment to environmental protection.
On this point, the Secretary said the government will not tolerate illegal practices, but will also disregard “false narratives based on protectionist interests”.
Source: Estadão Conteúdo