Brazil’s Economy Minister suggests extending emergency aid if pandemic persists

RIO DE JANEIRO, BRAZIL – Economy Minister Paulo Guedes said on Friday, March 12th, that if the economic and health impacts of the Covid-19 pandemic persist longer than the period covered by the new four-month round of emergency aid, the government will have to re-examine a potential extension of the benefit granted to the most vulnerable.

“The emergency aid is for the pandemic. Should the pandemic continue among us, then we will have to discuss emergency aid again in the future. But if the pandemic is gone, the emergency aid ends, and people covered by the Bolsa Família (Family Grant) will revert to it, perhaps not to the Bolsa Família anymore, but rather the Renda Brasil (Brazil Income),” said Guedes in a videoconference.

The approval of the Emergency PEC (Proposed Constitutional Amendment) in a second round in the Chamber of Deputies on Thursday opened the way for granting the benefit, in an amount of up to R$44 (US$7.6) billion exempt from current spending limit rules.

President Jair Bolsonaro has said that the monthly aid will amount to an average of R$250 and will be paid for four months. The joint session to enact the PEC will take place next Monday.

Guedes also said that the first instalments of this new round of aid will “possibly” be paid in early April, relative to March.

The Minister of Economy also said on Friday that he believes in the approval of administrative reform, saying he is “confident in this reformist drive in Congress.” He also said that tax reform “must be undertaken this year,” mentioning the different stages of the government’s proposal.

“We will negotiate based on the proposal that is currently there, from Baleia Rossi (Chamber), we will negotiate based on the proposal from (Luiz Carlos) Hauly, from the Senate, but we will negotiate slowly, topic by topic, rather than all at once and potentially come up with something that does not reflect the government’s philosophy,” said Guedes, referring to other proposals for tax reform being discussed in Congress.

In a mixed commission, Congress is discussing two PECs that deal with the tax reform. In turn, the government forwarded its proposal, a bill establishing the Contribution on Goods and Services (CBS) by unifying the PIS/Cofins (Program of Social Integration/Contribution for the Financing of Social Security) into a single value-added tax (VAT).

In his live appearance, the Minister made a point of repeatedly emphasizing the need for mass vaccination for a safe return to work.

“The inescapable priority is mass vaccination. With this, we will build the immunization of the Brazilian people to ensure that the informal economy, not only the formal economy, will also recover.”

Commenting on the significance of the population’s immunization process, Guedes projected that, upon the resumption of economic activity, the country’s primary deficit “may also surprise, by being much lower.”

“We believe that by the time the economy grows by 3%, 3.5%, we will be able to generate a slight surplus, and then everyone will understand why we have been saying all along that we will not raise taxes,” he said.

Leaving the government

When asked if he is considering leaving the government at some point, Guedes said he would leave the post should he realize he was no longer useful to the country, either due to President Jair Bolsonaro’s lack of trust, or due to the government’s change in trajectory.

“Our path is the path toward prosperity. Should it start heading toward the path of confusion, of economic disorganization, don’t count on me to promote the disorganization of the economy. I am critical of dirigisme, I am a liberal,” he pointed out, asserting that he wants to help the country.

Rebutting perceptions that there had presumably been political intervention in Petrobras due to Bolsonaro’s decision not to reappoint the company’s CEO Roberto Castello Branco to his post, Guedes said that the president “had his reasons”, in reference to the pricing policy practiced by the oil company.

“The president has said that he is not going to privatize Petrobras, so it is clear that good governance is essential, so we warned the president: ‘look, we must have good governance’. ‘But of course, I want to replace him (the company’s CEO), his contract is about to expire, I want to replace him’. Fine, have someone in charge.”

“Is that a threat to governance? Let’s see, for now everything is proceeding according to the law, let’s see if this will be a threat to governance,” added the Minister.

Source: MoneyTimes