Aimless and directionless
Economy Minister Paulo Guedes is annoyed that the institutional crisis is contaminating the economy, which has begun to slip. He asserts that this has nothing to do with the fundamentals. According to Mr. Guedes, the primary deficit this year should be 1.7% of the GDP, a percentage that will drop to 0.3% of the GDP next year. These forecasts, he says, guarantee that there is no lack of control in public accounts."Today there is not the slightest basis, from a strictly economic point of view, to say that Brazil is losing control. It’s exactly the opposite, Brazil went through the biggest fiscal crisis, the biggest depression of modern times, and it recovered in record time," the minister has repeated in meetings with businesspeople.It is important to say that the responsibility of the crisis between the Executive and Judiciary branches relies on President Jair Bolsonaro "who is obsessed with an alleged conspiracy against his re-election," says a source in the government. The economy, which seemed to be reacting and could play in favor of re-election, began to falter. Not exactly for fear of the consequences of Mr. Bolsonaro’s fight with two justices of the Federal Supreme Court (STF): Alexandre de Moraes and Luís Roberto Barroso, and the risks that this brings to democracy, but because it is becoming clear every day that nothing will go further, as the president is busy with other matters. There will be no tax or administrative overhaul bill, and the income tax package is unlikely to be voted.Bill 2337/2021, which conceived the changes in the income tax of individuals and companies, was a patchwork quilt without a clear purpose, but without it, it is more difficult to finance the new cash-transfer program Bolsa Família, called Auxílio Brasil. The foreign exchange rate, by the fundamentals, should be at R$4.50 to the dollar, and not at R$ 5.30, says an advisor in the government’s economic team. The sharp devaluation of the real, associated with the increase in electricity rates and gas prices, worsened inflation expectations and the IPCA-15 already shows double-digit inflation in four capitals. The IPCA-15 accumulated in twelve months was 10.37% in Porto Alegre, 10.67% in Goiânia, 11.37% in Fortaleza, and 11.43% in Curitiba."President Bolsonaro’s closest aides keep saying ‘Oh! Look at the high inflation and interest rates that are going up too’. They say that the liberal proposal doesn’t work and that we only want to sell state-owned...
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