LatinNews Daily - 03 August 2022

BRAZIL: Lula details more economic policies

On 2 August, Brazil’s leftist former president Luiz Inácio Lula da Silva (2003-2011) said that his government would finance small and medium-sized companies instead of big ‘national champions’ if he were elected in the October election.  


The announcement marks an about-turn from his first two terms in office when much of the development strategy was to create large corporations, like the construction company Odebrecht or meat-packing giant JBS. The problem was too much money, too fast with too little control. And the result was corruption. It marks the closest to a mea culpa Lula has come with regard to economic policy during his eight years in office.

  • The BNDES [national development bank] will no longer finance large companies, no. The BNDES will finance small and medium companies, small and medium entrepreneurs,” Lula told supporters in Campina Grande city (Paraíba state). He also held out the prospect of increased financing for farmers.
  • The proposal has the potential to generate many jobs and also help attract middle class voters. Small companies account for more than half of all formal jobs, official statistics show.
  • With an investment portfolio of R$443bn (US$84bn), the BNDES is one of the largest development banks of its kind.
  • The idea behind the policy of ‘national champions’, driven by the prevailing sentiment of economic nationalism, was to create Brazilian multinationals that could compete on an international level.
  • Lula yesterday also pledged to increase the minimum salary above the rate of inflation. “I want to tell you loud and clear that all organised categories will receive a salary above inflation.”
  • The monthly minimum salary is currently R$1,212 and has been adjusted roughly in line with consumer price increases. During the governments of Lula’s Partido dos Trabalhadores (PT), it increased by as much as 13.4% above inflation in one year, which boosted purchasing power and helped fuel the economy but also increased government spending obligations.
  • Lula leads President Jair Bolsonaro by about 10 percentage points on average in opinion polls.

Looking Ahead: If financing a few big companies helped foment corruption, then Lula may have to address how he intends to prevent fraud when financing many more companies. In fact, he is yet to say much at all about lessons learned from past corruption scandals.

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