Undermining 13 years of progress? How Brazil is risking its status as a global development leader
ActionAid International
11

I respect you as a human being but cannot concur with your opinions set forth in this article.

The last 13 years have been disastrous for Brazil. PT, the ruling left party at the time with Dilma Roussef as president, has had the unique opportunity to implement sound policies in the economy, such as maintaining a fiscal surplus, a floating FX rate and inflation targeting, among other microeconomic measures that could have served its agenda, but have instead experienced with unorthodox measures that undermined their short lived artificial achievements, i.e. reduction in poverty, social inclusion, etc., that you so keenly defend.

So Dilma is the only one to blame here, if we are to clearly associate cause and effect. Temer has not had the chance to inflict so mad damage in the economy as Dilma and Lula did. The sole reason is that he has been our president for less than a month, and has to clean up the mess first.

A few of Dilma’s mistakes were, for instance, augmenting the minimum wage above productivity levels and at the same time offering cheap credit through public banks and especially through BNDES and Banco do Brasil, without any regard to risk and return, to fund programs, people and companies, with negative interest rates and dubious beneficial externalities (please see the recent unprecedented corruption scandals). This could only create the illusion of wealth and social inclusion that were doomed to be short lived. The outcome we all see now. It is a mix of unemployment and inflation, with a nice recession above 3% of GDP in 2015 and 2016, a 10% fiscal deficit that will reverberate into the future, and of course social instability and a well deserved impeachment.

I just mentioned a few mistakes, but there are many:

  • Changing rules in the PPPs every 2 seconds, causing institutional instability that scared off investors.
  • Trying to stipulate a maximum ROI on those PPP auctions with the same outcome as above.
  • Freezing energy prices for electoral purposes, creating huge debts, and inflationary pressures.
  • Accelerating public programs, such as pronatecs, fies, etc using money from Banco do Brasil and Caixa Economica. The so called “Pedaladas”.
  • Giving up on tax revenues and at the same time spending above any reasonable means. Equals 10% of fiscal deficit in nominal terms.
  • Hiring public servants when the opposite should have been done.
  • Being politically inept to win the majority in Congress.
  • Trying to hold on to power by means of unprecedented corruption that permeated all levels of government. By the way, Lula is currently being prosecuted for being the founder of this scheme.

As you see, we have enough problems internally that need to be addressed before spending money we do not have on programs for poverty reduction in Africa or other overreaching ventures that you glamorously assign to “sound” achievements during the last 13 years.

13 is actually a prime number worth skipping for now.

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