The President of Brazil, Jair bolsonaro, insisted this Sunday that “the price of nothing” will not intervene, amid rising inflation and market doubts about the government’s economic policy after altering the fiscal responsibility rules. Bolsonaro defended his project to increase social assistance but denied that the initiative is related to his objective of seeking re-election in the 2022 elections, as opponents and analysts point out. Five senior officials of the Economy portfolio resigned last Thursday in alleged disagreement with Minister Paulo Guedes and his “surprising” policy of increasing public spending, betraying his fiscal orthodoxy.
“I have no power to interfere with Petrobras”
“We are not going to interfere with the price of anything. This was done in the past and it didn’t work.”said Bolsonaro, anticipating that there will be a new fuel readjustment soon. The average price of gasoline and diesel have risen in Brazil by around 40 percent so far this year, driven by the rise in oil in the international market and the strong appreciation of the US dollar against the Brazilian real.
The Brazilian president said that state oil company Petrobras is “tied” to international prices and that his government cannot do anything against it. “I have no power to interfere with Petrobras”, he assured.
Contrary to those statements, Bolsonaro appointed Army Reserve General Joaquim Silva e Luna as the new president of Petrobras last February, after spending weeks criticizing the repeated readjustments in fuel prices, which continue to occur today. In addition, days ago he even said that he had “desire to privatize” the largest company in the country.
Bolsonaro spoke to the press this Sunday with his Minister of Economy, Paulo Guedes, while they toured a market in Brasilia, in a new attempt to give signs of unity after the nervousness of the last days in the markets. The São Paulo stock market registered a weekly fall of 7.3 percent, after five senior positions in the Ministry of Economy resigned, motivated by the government’s decision to modify the spending ceiling to extend economic aid to the poorest in 2022, the year in which Bolsonaro will attempt his re-election.
The striking increase in spending
“We are doing that at the limit of fiscal responsibility”Bolsonaro said. “We regret the situation in which the poor find themselves in Brazil, experiencing difficulties. We are not fighting for elections in 2022, that subject is not touched, “defended the ultra-right leader.
For its part, Guedes defended that “the reformulation of the expenditure ceiling is technically correct”. The president “has a very difficult political decision to make. If he respects the ceiling, he leaves 17 million families starving,” said the minister, an orthodox liberal from the Chicago School.
The initiative of the president of increase to 400 reais (about $ 70) by the end of 2022 the amount of the social aid program Auxilio Brasil, successor to the popular Bolsa Familia, was unveiled last week, as images of people searching for food in the garbage multiplied.
The ceiling of public spending is a flag of Brazilian neoliberalism incorporated into the Constitution by the government of Michel Temer in 2016, which prevents increasing the budget for 20 years beyond inflation, but for the first time Guedes said that he intends to take a “license” to make Bolsonaro “more reformist and popular” but “not populist”.
Nevertheless, Bolsonaro himself had to clarify that “the spending ceiling will not be pierced”, despite the fact that a project has already been sent to Congress. Social plans have never been updated since 2016, after the dismissal of Dilma Rousseff and now Bolsonaro intends to give 100 reais more for 12 months as part of extra help due to the pandemic.
The Auxilio Brasil plan aims to be a social leg of Bolsonaro to face at the polls next year the former president and opposition leader Luiz Inácio Lula da Silva, famous worldwide for having taken Brazil off the hunger map of the United Nations Food Organization and Agriculture (FAO).
From the market and in sectors of the opposition to the government, it is proposed that the amendment to the Constitution sent to Congress by the government to allow altering the spending ceiling will allow the inclusion of other disbursements beyond the Brazil Aid, convenient for Bolsonaro in his strategy for the campaign for a second term, at a time when his popularity is at the lowest point since he took office in 2019.
Guedes also put pressure on the Senate to advance in the structural reforms that are in process, such as an administrative and a tax reform, and thus have more space in the budget. “Brazil is growing and Brazil is going to grow,” said the head of the Economy portfolio, despite the record unemployment levels, above 14 percent, and runaway inflation that has exceeded 10 percent year-on-year.
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