Guedes: Exiting the crisis due to increased spending and taxes will not be with us | Brazil

“Creating new taxes, to increase the tax burden, will not be our government,” said the live minister promoted by Itaú BBA. “The exit through public investment and the tax increase will not be with us. We won’t do that. ”

According to Guedes, payroll taxes are a weapon of mass destruction of jobs. He affirmed again that he does not believe that Brazil will emerge from the crisis “by digging deeper into the hole we are in exactly to dig”.

The Minister of Economy considered that in a democracy, Congress can decide to increase the tax burden. “It is another matter,” he said. “It is normal that I can veto, as now, the salary increase.”

For him, public opinion would be relentless and it would be a mistake for this year’s public spending to become permanent in wage increases. “It would be a condemnation of Brazil to high interest rates again,” he said, adding that this would again condemn Brazil to low growth.

He also noted that critical prices in the economy have changed because the dosage between fiscal and monetary policy has changed, resulting in lower interest rates and a slightly higher exchange rate. “This is our combination.”

Guedes also stated that the challenge for Brazil is to demonstrate to the market that, despite the increase in spending to combat the pandemic of covid-19, public spending is under control. Therefore, he reaffirmed, it is important that public officials agree to join this effort and accept the wage freeze.

Guedes answered a question from the president of Itaú Unibanco, Candido Bracher, according to which there is a consensus in society about the need to expand spending at this time, but there are doubts about the awareness of the population about the importance of fiscal sustainability.

“What we are asking at the moment (from public servants) is that they make a contribution to the country, that we can make it very clear that the tax regime is still strong,” said Guedes, according to whom Brazil must demonstrate that it will not return to the trap. low growth and “Snowball debt”.

“We will guarantee this if the market perceives that public spending is under control,” added the minister, considering that this could be reconfigured if the economy enters a deep depression. Still, he said he was confident the resume will be a “V”.

The minister also responded to criticism that the government was slow to take measures to deal with the crisis and said that, while the United States unemployed 26 million workers in approximately 5 weeks, in Brazil, there was a loss of 1 million formal jobs. . The caged data has not yet been released by the government this year. The latest data presented is from December 2019.

Guedes noted that more than 6.5 million jobs have already been preserved with the program that allows a reduction in workload or the suspension of the contract. He also said that 40 million Brazilians were digitized with the help of the emergency. The minister said that the government has been able to “maintain the vital signs of the economy” and that the most probable hypothesis so far remains an exit from the “V” crisis. “The least likely hypothesis is prolonged depression,” he added.

He also reiterated that Brazil is spending twice as much as emerging countries on measures to combat the crisis and “10% to 15% more” than advanced ones.

The minister said that control of spending allowed “a little more resources” for public investment in the country. Still, he argued, values ​​are not enough to leverage the economy.

According to him, federal public investment currently amounts to 0.6% of GDP. “If we triple, we go to 1.8% of GDP. It is nothing, ”he said. “No matter how ambitious the plans are to increase public investment, it is more or less equivalent to defending the braces,” he said.

The minister defended the approval of the legal framework for sanitation as one of the ways to boost growth. “The way out of the crisis will come with cyclical recovery and private investment.”

During life, Guedes stated that Brazil can still bounce back in “V” because the vital signs of the economy still exist. He advocated looking halfway between those who defend only the economy and those who only look at health.

According to him, observing only health, a depression movement in “L” can occur. “There has to be a balance between the vision of health and the economy. Virtue is in the middle, “he said.

It considered that by increasing the value of emergency aid, the temporary capacity to maintain this aid can be reduced.

According to the minister, the scenario of former Health Minister Luiz Herique Mandetta said that in June there would be a reduction in the number of cases, but the new minister is still mapping the situation and will present a new scenario. Meanwhile, he argued, the country must continue to prepare regulatory frameworks and reforms. In this sense, if there is already a recovery in the second half, the country will focus on three, four or five major privatizations.

The minister also said that there is no resumption of markets without the reconfiguration of taxes, and once again dismissed the importance of reducing interest rates. “It will be hell for rentiers and it will be paradise for entrepreneurs.”

Guedes also highlighted the fact that Brazilian exports continue to grow, unlike other G20 countries. “It was the only country that maintained trade flows, and because it mattered less, our trade surplus was huge,” he said. “We export more to China than to the United States, Europe and Argentina together.”

The minister also stated that, despite being concerned about the health situation and its impact on the economy, he is optimistic about the medium and long-term prospects.

According to him, this is because Brazil will be a more open economy, which will grow at higher rates and with the private sector as the engine. In addition, he added, Congress is reformist and there is a democratic center that supports the reforms.

“I cannot be pessimistic about the economy, I can worry about health and the impact that health can have on the economy,” he said.

He stressed the importance of making political reform and said that the government will attack niches where corruption occurred.

Regarding Congress, he said that politicians can choose the interlocutors of his team, because “personal chemists” cannot interfere, but everything will pass through their hands. “Nothing will be resolved unless it happens to me,” he said. “But the content goes through us and it works with us or it doesn’t happen.”