Brazil's public spending must not increase any further, finance minister says
During the Congress on Information Technology of the Financial Institutions in the Brazilian Federation of Banks, held in São Paulo, Finance Minister Henrique Meirelles said Thursday (Jun. 23) that Brazil's public spending should not continue to grow, and s should be kept under strict control—which is the reason behind the creation of a constitutional amendment bill limiting public spending to primary expenditures in the Executive, Legislative, and Judiciary branches. In the bill, drafted by the government, the increase in spending will be limited to the change in the official inflation observed in the previous year. The ruling should remain in effect for 20 years.
“Public spending shouldn't continue to grow. That's why we created the program, which, first and foremost, assesses this year's real deficit, taking into the construction projects implemented, the delayed payment of the rent of Brazil's embassies overseas, among other things. We've concluded that the deficit totals to [$50 billion]. The first thing society should be told is that we're going back down from here. It's tough, but the control must be strict,” Meirelles said.
The idea, Meirelles said, is to start the adjustment from the overall spending ceiling, which will not be allowed to sur the year's inflation. “If that becomes part of the Constitution, it turns into a cast-iron rule.”
Some of the spending items are incompatible with the rule, Meirelles said, like education and health care. The proposal aims to have funds consistently adjusted according to the target established. “Health care and education are indeed national priorities, but we must not begin bring by breaking the country. The problem with education in Brazil is not the amount of funds, but quality, rather. This demands major investments, and earmarking funds is not the solution. We'll keep the funds for education—in real figures.”
Meirelles said that moments of crisis provide an opportunity for growth and that society has calling for answers. “We must restore growth, and, in order to do that, we need to recover the confidence that the government is capable of handling its own s—then we can see a decline in the total resources absorbed by society for settling the public debt. History shows us that interest rates drop as soon as public debts are reined in.”
National Congress
Meirelles said that the National Congress has approved important moves like the project on the governance of state-run companies, adding that the model for opening pre-salt exploration is underway, as it is deemed a government priority. The social security reform, he says, is crucial, and the government believes it may be approved in up to three months.
The minister further mentioned the new negotiation of state debts, consolidated Monday (Jun. 20), and declared that Brazil's fiscal problem is not an issue in the federal government alone, and that some of the largest states have demonstrated a growth in spending that sures inflation. “The bill created with the states stipulates that the expansion of public spending is to observe the same limit as the federal government. We've reached a deal and they accepted that.”
The minister believes that, with all those moves in progress, the government will be capable of working on a micro-economic agenda, hearing suggestions from a range of business sectors. “The idea is to bring confidence in the economy, and then increase the collection, surplus, and consumption, thus leading Brazil into a period of sustainable growth.”
Meirelles also said that the country has reached a point where decisions must be taken, as the gross domestic product may face its most significant plunge since it started being gauged in the country, depending on the results achieved this year. “This brings unemployment to current levels—over 10 million people—and contaminates the whole way in which the economy operates, by increasing uncertainties and reducing the amount of decisions for consuming, investing, and hiring.”
According to the minister, some sectors of the economy face an idleness rate above 40%. In order to address this issue, he went on to argue, the country must identify the most severe problems and tackle them first. “A disorganized attempt at attacking all sorts of problems at the same time demands to much effort, and results may prove inefficient.”
Translated by Fabrício Ferreira
Fonte: Brazil's public spending must not increase any further, finance minister says
