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Minister Paulo Guedes (Economy) authorized the presentation of the quarantine account. It plans a controlled resumption of activities to prevent the country from falling into social chaos in July.
The Secretary of Economic Policy, Adolfo Sachsida, published on Wednesday (13) a projection of a 4.7% drop in GDP (Gross Domestic Product). Before, there was an increase of 0.02%.
The agency’s technical note estimated that each week of isolation prevented the country from producing R $ 20 billion in wealth. If confirmed, it will be the largest decrease in GDP since 1901, according to IBGE data.
In this scenario, there is a change of discourse in the Guedes team to loosen the measures of social isolation. The change is in line with statements by President Jair Bolsonaro.
Unlike the chief, the minister had supported confinement as a way to contain the spread of the coronavirus. The measures in states and municipalities have lasted two months.
Now, several factors lead Guedes’ team to predict that the economy will enter the ICU with the activities stopped. The deterioration will compromise the well-being of the population from the second semester.
In the evaluation of the technicians, given that they remain behind closed doors, small companies have spent two months without access to credit due to the government’s difficulties in structuring loan guarantee mechanisms.
According to internal portfolio data, these companies have an unprecedented bankruptcy rate. They represent more than 80% of formal jobs.
Economic projections based on unemployment insurance data indicate that, for the time being, the layoffs resulting from the crisis caused by the coronavirus represented fewer than 800,000 jobs.
However, the evaluation is that it could exceed 5 million by the end of the year if the parachute extends in the states and municipalities. These companies are the main employers, especially in the most remote regions of the country.
Guedes’ concern is that there will be no cash available if, after June, it is necessary to renew the deadline for emergency policies to help the population and companies.
Union spending on the pandemic, including R $ 600 aid for informal workers, already brings this year’s Budget to a deficit of R $ 600 billion.
So far, the government has managed to minimize the increase in formal unemployment with a provisional measure that authorized the reduction of hours and wages for three months.
Many sectors request that this policy be renewed until the end of the year. Sachsida rejects an extension and says an expansion in the period of restrictions will increase the economy’s losses.
The projection considers that the longer the period of isolation, the greater the number of bankruptcies and layoffs. The measure also expands corporate debt.
“This note does not have a critical connotation on social isolation policies,” said Sachsida. “[Essa nota] it was done exclusively to show the economic cost of these policies and make estimates for GDP. “
Guedes’ aides said the calculation of the insulation losses had been ready for weeks. However, Guedes preferred to cling to him so as not to appear that he was defending the economy instead of health.
This “first wave” of the coronavirus, as Guedes calls quarantine, prompted the government to free up resources to prevent unemployment and keep people in their homes. As a result, public debt will reach 90% of GDP this year.
The economic team prepared measures such as reducing working hours and wages, allocating resources to corporate credit, giving up income (fees, taxes, and contributions) to try to prevent mass contamination from leading to the collapse of the public health system .
During this period, Bolsonaro defended the resumption of activities minimizing the effects of the coronavirus.
This position sparked a political dispute with the governors and mayors, who in several cases ignored the federal decree that expanded the list of essential services.
Last week, the president took advantage of the visit of industry representatives at the Planalto Palace to put pressure on the president of the STF (Federal Supreme Court), Minister Dias Toffoli.
After hearing from businessmen that the economy had stopped and that the effects would be detrimental, Bolsonaro requested a surprise hearing in court.
It took businessmen to try to share the burden of the crisis with Toffoli. During the visit, representatives of 15 sectors of the economy told Toffoli that they are ready for the resumption.
They said they could return to activities with safe health protocols.
The Supreme President asked for responsibility. He proposed the creation of a committee that involves all powers, including federated entities: states and municipalities.
In the conversation, Guedes said that the pulse of the economy was weak and that we were in danger of “becoming a Venezuela” if the isolation persisted any longer.
Behind the scenes, the head of the economy is evaluating proposing that the group proposed by Toffoli be able to discuss a “controlled resumption” program. The measure would apply to suitable sectors, such as car manufacturers and industries.
Control would be guaranteed by a protocol to be defined by the Ministry of Health with the necessary procedures (adaptations of assembly lines, such as the distance between employees) to avoid contagion. For that, mass testing would be required.
Another idea in progress would be to eliminate the population that is part of the risk group, such as the elderly, from the home of these workers, especially those most in need.
People who participate in the discussions of the Economy affirm that a proposal under analysis in the Civil House provides for the selection of older people, especially in large urban centers, and the transfer to hotels that are currently closed.
The task force would be organized by the Army.
