Brazil’s Economy Minister says he would rather leave than “push Brazil down the wrong path”

RIO DE JANEIRO, BRAZIL – Economy Minister Paulo Guedes said during a podcast released on Tuesday, March 2nd, that he is “dismissible in 30 seconds” should President Jair Bolsonaro no longer believe in his work, but that as long as he is “helping Brazil” and doing the things he believes in, he must remain. According to him, insults would not remove him from office.

“If he doesn’t trust me, I am dismissible in 30 seconds. If I am managing to help Brazil, doing the things I believe in, I must remain. Insults will not drive me out. The fear, the fight, the wind the rain, that won’t drive me out of here at all,” the Minister stated.

And he added

“What will drive me out of here is losing the president’s trust or taking the wrong path. If I have to push Brazil down the wrong path, I would rather not do it, I would rather leave. That hasn’t happened.”

The statement came at the end of a week marked by the developments of Bolsonaro’s decision to announce that General Joaquim Silva e Luna would replace Roberto Castello Branco at the helm of Petrobras.

The firing of Castello Branco, recommended for the position at Petrobras by Guedes and a longtime friend, led the market to question the company’s future pricing policy.

Privatizations

In the podcast, the Minister supported the transformation of the Brazilian government and said that these changes are difficult to implement because “the mentality of Brazilians is still very much in the past.” He mentioned the nationalist slogan dating from the 1930’s – “the oil is ours- ” recalled by Bolsonaro last week and proposed sharing resources from public companies with the population.

“There is a bunch of people who say ‘the oil is ours’. Is it ours? Then let’s give it to the Brazilian people. Let’s take Petrobras’ dividends and let’s hand a part to the Brazilian people.”

According to Guedes, stripping Petrobras of its monopoly over oil exploration, refining, and distribution is positive because it will lead to more competitive prices and jobs. Likewise, he advocates the privatization process of Correios and Eletrobras.

“For Brazil to grow, we need to invest in electric power generation and transmission, and Eletrobras has lost its investment capacity. It can only invest R$3 billion per year, and Brazil needs R$14.7 billion in investments every year. So it is slowly dying because it has no investment capacity.”

According to Guedes, if the company manages to capitalize on the stock market and is privatized simultaneously, it could generate 136,000 jobs, which has not been the case while remaining a state-owned company.

Argentina and Venezuela

The Minister expressed concern with the increase in public spending and with the long road of reforms that still needs to be traveled. Without the measures passed, he said that Brazil may experience situations similar to Argentina and Venezuela’s, neighboring countries in economic crisis.

“There will come a time when you can’t do it anymore. It’ll take six months to be like Argentina. To become Venezuela, a year and a half. If you do it wrong, it’ll go wrong. Do you want to go to the other side, do you want to become Germany or the United States? It’s ten, fifteen years in the other direction.”

Emergency aid

Guedes was asked about the discussions surrounding the PEC (proposed amendment to the constitution) establishing a new round of emergency aid to be analyzed without the introduction of compensation for granting the benefit.

“That would be chaotic for Brazil and would have a very negative impact on Brazilians. This is what we learned last year and we can’t repeat it,” he said.

The Minister argued that the government released several protection measures for the most vulnerable throughout the pandemic, but it can’t now allow a disregard for public spending. In his opinion, to split the debate about the granting of aid and compensation into two parts would be to pass the cost on to future generations at the risk of strongly compromising economic activity in the country.

“Interest rates start to rise, economic growth ends, and confusion begins. Debt snowballs, investor confidence disappears, job creation, income, innovation and unemployment increase. It’s the path to poverty, the path of Venezuela, the path of Argentina.”

According to Guedes, the only compensation the government wants is a freeze on government employee salaries.

“We are not going to take anything from anyone, we simply won’t raise salaries. No raise last year and this year it’s R$150 billion,” he said, stressing that this money will be invested in health.

Guedes also talked about preserving the good things of past governments and mentioned as an example the Bolsa Família (Family Grant), an upgrade of the Bolsa Escola (School Grant) and other social welfare benefits that were merged with the aim of escaping perpetual poverty.

“We are also going to create a similar program, improve it a little more. We will call it Renda Brasil in the future,” he said.

Renda Brasil (Brazil Income) was the first redesign of Bolsa Família made public by the Bolsonaro administration. The economic team’s proposal was to eliminate benefits considered inefficient, such as unemployment insurance and salary bonuses, in order to boost Bolsa Família.

After much debate on how to finance the new program – which also changed its name to Renda Cidadã (Citizen’s Income) and considered using escrowed funds from judicial payment orders and FUNDEB (Fund for Maintenance and Development of Basic Education and Valuing Education Professionals) to enable the initiative – president Jair Bolsonaro closed the public debate. Among the arguments, the president said he would not take money from the poor to give to the very poor.