On 23 September, Brazil’s Economy Minister Paulo Guedes and the government leader in the federal chamber of deputies, Ricardo Barros, indicated that the executive and congress are working hand-in-hand to implement economic reforms.
Analysis:
Guedes has a notoriously fractious relationship with the legislature, one of several factors which have contributed to delaying the presentation and implementation of his planned economic reforms for Brazil. Comments made to the press by Guedes and Barros together yesterday, after a meeting with President Jair Bolsonaro, seemed to be an attempt to provide reassurances on the government’s economic agenda, deemed a necessary step in the country’s path to recovery post-coronavirus (Covid-19) pandemic.
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In a press conference yesterday, Guedes praised congress’s recent work, and said that the government’s reforms are being built jointly with the legislature. The government recently presented two of its flagship projects to congress: part of a (still to be fine-tuned) tax reform, and an administrative reform. Barros similarly said that the tax reform was being designed by the government, with input from congressional leaders.
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On the subject of tax reform, Guedes said yesterday that it was necessary to reduce the burden of payroll taxes, so as to stimulate employment, but noted that this would be compensated by “other taxes”. This has been understood as a reference to a mooted tax on financial transactions, a re-creation of the hugely unpopular CPMF tax which Guedes has long supported, but which is opposed by many in government.
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Guedes also spoke of the need to “soften the landing” after the payment of the emergency basic income – a benefit implemented during the pandemic which has reached a third of the population – stops at the end of this year. Barros said that the government is now looking into how it might be able to finance social programmes, even a basic income scheme (Bolsonaro last week shut down talk of his government’s previously announced social programme).
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Barros stressed congress’s “commitment to the spending cap and fiscal rigour” – an important point for Guedes, which he has had to fight for in government over recent months.
Looking Ahead: “Congress is reformist, the president supports the reforms [...] we’re building the agreements, building the solution”, Guedes said yesterday, in an apparent bid to instill confidence in the successful outcome of his economic agenda. |