Dehydration in reforms, clashes over the return of emergency aid and obstacles in the privatization agenda create challenges for the effectiveness of the economic guidelines defined by Guedes
Winning betting Jair Bolsonaro (without party) to command the National Congress generates a new wave of optimism for the approval of reform agenda and other guidelines considered fundamental for the recovery of the economy in the post-crisis. The expectation of financial market with the election of Arthur Lira (PP-AL) to preside over the board of directors of the Chamber of Deputies, and Rodrigo Pacheco (DEM-MG) in the Senate leadership are reflected in the fall above 1% of the dollar this Tuesday, 2 , while the Ibovespa returns to flirt with the 120 thousand points. Euphoria, however, can become frustration. For economists and market analysts, the reformist momentum of the new presidents may be less than the size of the country’s needs, reflecting an advance of the economic agenda to a potential less than ideal. It is also expected the clash for the return of the emergency aid or the creation of a new social program along the lines of Bolsa Família. Still in the campaign, the two new presidents of the Congress were favorable to the return of the benefit given to the most vulnerable during the Covid-19 pandemic. The economic team, on the other hand, vehemently rejects the idea, including with Paulo Guedes threatening to paralyze investments in education and public safety if the benefit is revived.
After almost two years of fighting with the former mayor, Rodrigo Maia (DEM-RJ), Lira’s victory represents, in theory, greater ease of articulation between the federal government and parliament. Sérgio Vale, chief economist at MB Associados, points out that this approach may speed up issues that are dear to the economic team, but in a different direction than desired. The clashes around the tax reform exemplify this issue. While the former presidency defended PEC 45, which united five taxes (three federal, one state and one municipal) in one, the Ministry of Economy sent a text that joins only the taxes of the Union. “We are at risk of economic policies that advance are not the ideas. There is room for more interesting reforms if the government also wanted to do that. The modeling planned for the next two years is very bad and will not achieve reforms worthy of the name ”, he says. THE administrative reform that Guedes’s team sent in 2020 is also pointed out as a case where the government lost the opportunity to propose something bolder and with better results to fiscal control. The proposal that aims to change the functioning of the public machine left out all the servers that are already in the government, in addition to not including categories of the Judiciary and Legislative. “From the first signs, we see that we have a very aggressive new president in the Chamber. He is part of the center, which has its demands with the power to be more harmful to the fiscal issue than those defended by Maia ”, says Vale.
Discussions about emergency aid should also put pressure on this “honeymoon” moment between the federal government and parliament. The two new Legislative commanders supported the return of the appeal in the face of increased new coronavirus pandemic and the adoption of stricter social isolation measures. Minutes after being elected president of the Senate, Pacheco said that he pledged to talk to the economic team “to look for ways”, while Lira said he would prioritize the Emergency PEC, which, among other issues, also includes the financing of social benefits. The return of the benefit is constantly rejected by the federal government. In a conversation with investors at the end of January, Bolsonaro said he would not turn temporary measures into fixed costs. Guedes went deeper and said that the return of the project, which cost R $ 320 billion to the coffers last year, would paralyze investments in other areas of the government. Marcelo Kfoury, professor at the School of Economics of the Getulio Vargas Foundation (EESP / FGV), says that the return of the aid would be feasible only with a constitutional reform, which is out of the question at the moment. “It was possible last year because we had the ‘war budget’, which gave a blank check to spend above what was allowed. That expired on December 31, there would have to be a constitutional reform. Guedes is against it, and it is very difficult to make a constitutional amendment without the articulate government ”, he says. Despite the pressure to return aid, Kfoury calls attention to the behavior of the economy in the first months of this year and the repercussions that the pandemic will raise. “The economic activity of the countries affected by the second of Covid-19 has not fallen so much. Despite being a delicate situation, not necessarily this increase in the pandemic will make the indicators as bad as April and May, with job losses and very strong isolation. ”
The advance of privatization agenda with the new congressional command, it also runs the risk of remaining stagnant. On several occasions, Guedes put the failure to sell state-owned companies in an agreement that Maia would have made with left-wing parties. The tight timetable and the advance of the centre’s parties over the public machine may become the new obstacles to the project of the economic team. “Congress is still going to discuss the 2021 Budget and emergency aid. This agenda would be for the second semester, one year from the elections. The centão would lose political space, it already has resistance from the military. On the eve of the elections, asking for privatization would be a positive surprise ”, he says. Kfoury, from FGV, is also skeptical of major changes in the privatization agenda. “This year, something can still come out, but no big companies. It is easier to sell the fringes of large companies. For 2022, it is even more difficult.