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Brazil’s Lula da Silva inherits a blessed legacy from Bolsonaro, no matter what he chooses to tell the world

By Artur Piva

One of the great specialties of former president Lula da Silva, who is preparing to return to the presidency of Brazil on Jan. 1, is the administration of “cursed inheritance”.

This is how he solves all the problems in his government – the blame for everything lies with whoever came before, even if there is no blame.

On the contrary: he receives the house in order, but one minute later, he is already complaining that a disaster was dumped on him and that he has nothing to do with any bad thing that may happen until the last day of his mandate.

Brazil's Lula da Silva inherits a blessed legacy from Bolsonaro, no matter what he chooses to tell the world. (Photo internet reproduction)
Brazil’s Lula da Silva inherits a blessed legacy from Bolsonaro, no matter what he chooses to tell the world. (Photo internet reproduction)

It was like this with Fernando Cardoso.

Lula da Silva received a Brazil without the worst problem in its economic history – inflation, eliminated by his predecessor with the Real Plan.

Also at the ready was the privatization of telecommunications, without which the country would have gone under, of the mining and steel industries, and of the state-owned banks, which functioned as the governors’ private mint – possibly the only ones in the world that made losses.

Lula da Silva got away with it.

He applied this fairy tale, and instead of exposing the lie, Fernando Cardoso ended up thinking that he, Lula, was now the man who would save Brazil.

History may repeat itself now – with the difference that Jair Bolsonaro is unlikely ever to do the kiss-and-kiss that Fernando Henrique did.

The new president is already accusing the current government of the worst economic crimes of the last 500 years and all sorts of others – and the reality is just the opposite.

Bolsonaro will leave to Lula da Silva the best situation the country has ever had in the passage from one government to another in any recent era.

This is what the facts and figures show, as can be seen by 12 key indicators of the situation of the Brazilian economy at the moment.

1. INFLATION

Dilma Rousseff, Lula da Silva’s successor in the Presidency of the Republic, was removed from government, leaving a legacy of inflation that was a veritable cursed inheritance.

In August 2016, when the impeachment was completed, the Consumer Price Index – which measures the cost of living – for 12 months was close to 9%.

In the United States, it was just over 1% for the same period.

In September this year, the two countries swapped positions. Since then, Brazilian inflation has been lower than American inflation.

In October, for example, the price variation was 6.5% in Brazil and closed to 8% in the USA.

2. GROWTH

The economy is also more agile compared to the end of the last PT (progressive-globalist) administration.

According to the International Monetary Fund (IMF), Brazil’s Gross Domestic Product (GDP) shrank by about 4% in 2016. At the same time, the world grew by around 3%, and China registered an expansion of 7%.

For 2022, the IMF estimates almost 3% growth for Brazil’s GDP. The projection for the performances of the global economy and Chinese GDP this year is practically at the same value as in 2016.

The recovery of national production has been established even in an environment of international uncertainties.

Furthermore, the primary surplus - made up of the amount earned from exports minus the expenditure with imports - became 50% larger. The sum jumped from US$40 billion in 2016 to US$ 60 billion in 2021.
Brazil’s primary surplus – made up of the amount earned from exports minus the expenditure on imports – became 50% larger. The sum jumped from US$40 billion in 2016 to US$ 60 billion in 2021. (Photo internet reproduction)

Besides the Russian special military operation in Ukraine, which began in February, the government of President Jair Bolsonaro had to face an unprecedented challenge:

  • the coronavirus pandemic,
  • a global health crisis that limited trade between countries,
  • broke companies and disrupted global production chains.

3. UNEMPLOYMENT

Currently, the unemployment rate in the country is about 8%. This number was only lower in mid-2015, according to surveys conducted by the Brazilian Institute of Geography and Statistics (IBGE).

During the pandemic, the vacancy rate calculated by IBGE hit a record high of almost 15% in two moments: July to September 2020 and January to March 2021.

The mass destruction of jobs occurred in the wake of the restrictive measures adopted during the health crisis.

Contrary to the president’s position, the restrictions imposed by governors and mayors followed the maxim: “We will see the economy later”.

4. TRADE BALANCE

In 2016, the current value of the Brazilian trade balance — the sum of exports and imports — closed at 20% of the country’s GDP. In 2021, the proportion grew to 30%. This data shows an increase in the openness of Brazil’s economy.

5. PRIMARY SURPLUS

Furthermore, the primary surplus – made up of the amount earned from exports minus the expenditure with imports – became 50% larger. The sum jumped from US$40 billion in 2016 to US$ 60 billion in 2021.

6. FEDERAL TAX COLLECTION

Federal tax collection is almost 30% higher than when Dilma left office. In the accumulated 12 months registered in August 2016, the value was just below R$1.5 trillion (US$283 billion), according to data from the National Treasury.

In September 2022, the sum was close to R$2 trillion.

7. PUBLIC SPENDING

As of June 2022, the federal government has a primary surplus in the public accounts accumulated over 12 months; that is, expenditures have become less than expenses.

The positive balance for the same interval had not occurred since November 2014 (when the global economy was still highly favorable).

In the most current data, the extra value closed at practically R$85 billion in September.

8. SATE-OWNED COMPANIES PROFITS

State-owned companies have become profitable. Last year, the net result of these companies closed close to R$190 billion, 40 times just under R$5 billion of 2016 – and about R$230 billion more than the R$32 billion loss recorded in 2015.

9. INTERNATIONAL RESERVES

The country has around US$330 billion in international reserves to mitigate the effects of monetary instabilities. The figure appears in the current Central Bank report and represents the amount as of September this year.

10. AGRIBUSINESS

In early 2022, the Brazilian agribusiness production chains were threatened with the possibility of a fertilizer supply crisis.

The concerns occurred due to the sanctions imposed on Russia because of the invasion of Ukraine.

The Russians are the world’s leading suppliers of this vital input for agriculture.

Through diplomacy, the federal government managed to guarantee the supply of fertilizer.

Abunã Bridge over the Madeira River in Rondônia. (Photo internet reproduction)
Abunã Bridge over the Madeira River in Rondônia. (Photo internet reproduction)

As a result, Brazilian agribusiness will harvest a record 270 million tons of grains in 2022 – a mark that should be surpassed in 2023, with 310 million tons estimated for the following harvest.

In this context, meat production – adding cattle, pork, and chicken – continues to increase. The growths forecast for 2022 and 2023 are 1% and 3%, respectively.

The annual availability of meat per inhabitant should rise to around 3% next year.

Thus, the supply per Brazilian, discounting the exported volume, will be above 95 kilos.
11. Partnerships with the private sector

The government also leaves as a legacy a partnership program for investments with the private sector that guarantees the injection of R$1 trillion between investments and grants.

The extensive list involves around 150 projects, distributed among the states of São Paulo, Rio de Janeiro, Mato Grosso do Sul, and Pará, and the leasing of airport terminals in Paraná and Pernambuco.

Considering also the proposals under study, the program’s portfolio contains 224 projects. One of them, still under analysis, is the privatization of the Port of Santos.

When Bolsonaro assumed the presidency, the port of Santos, the largest in Latin America, was registering recurring losses.

The balance of operations for 2018 was negative by approximately R$500 million.

Now, the facility generates dividends. For example, the accumulated net profit from January to October is already positive by R$430 billion.

12. CONTINUED AND FINISHED WORKS

The current government has also given continuity to delayed projects started in previous administrations. An emblematic case is the transposition of the São Francisco River, which has been paralyzed in several stretches.

After 15 years of embarrassment and four presidents of the Republic, the transposition that intends to guarantee water in the Northeastern sertão was concluded.

Another example is the North-South Railroad. The construction work began in 1985, during the Sarney government.

The construction of the original route, which involves 1.5 thousand kilometers between Porto Nacional (Tocantins state) and Estrela D’Oeste (São Paulo state), should be completed by the end of 2022.

Its structure was planned to be the backbone of rail transportation in Brazil.

Also included on the list is the Abunã Bridge over the Madeira River in Rondônia. Inaugurated in May 2021, it took seven years to build.

In the panel on public works of the Ministry of Economy, about 130,000 projects started in previous governments and completed during Bolsonaro’s mandate are cited.

Projects of all sizes are listed: construction and renovation of daycare centers, hospitals, schools, shopping centers, and other public buildings, as well as structures such as bridges, roads, and railroads.

This is the legacy of a more economically open country, with balanced public accounts and in line with world growth, but which depends on the austerity adopted by the Bolsonaro government to maintain itself.

After being elected, Lula da Silva questioned, for example, the need to maintain surpluses, cut spending, guarantee fiscal stability and respect the spending cap.

Lula da Silva’s speeches give the impression that his administration will follow the opposite path toward the well-known Petrobras precipice.

With information from Revista Oeste

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