Bolsonaro delivers government plan without concrete proposals for the economy

President Jair Bolsonaro (PL) registered his government plan at the TSE (Superior Electoral Court) this Wednesday (10) redoubling commitments to a conservative agenda of customs and without presenting concrete measures that, in a possible second term, he will take to reduce public debt and put the country back on the path of economic growth.

Voting intention surveys show that the economic situation will be the main factor in the voter’s decision.

In this area, Bolsonaro’s government plan for an eventual second term works more like a great protocol of intentions, without concrete proposals for achieving the listed objectives – something that recalls the promises made during the 2018 campaign.

That year, Paulo Guedes, now Bolsonaro’s Minister of Economy, went so far as to say that it was feasible to bring the deficit to zero in the first year of Bolsonaro’s administration.

The result was quite different. This year, for example, Bolsonaro proposed a fiscal target that authorizes a deficit of about R$66 billion in 2023. The forecast is that the accounts will be in the red until, at least, 2024.

In the set of vague guidelines listed for the economy, two exceptions stand out. Bolsonaro promises to expand the group of people exempt from income tax, expanding the salary range to R$2,500 per month.

This measure had already been announced throughout his government by Minister Paulo Guedes, but it never got off the ground due to the need to generate cash. The revision of the IR table should not be included in the 2023 Budget proposal being prepared by the government.

The president also undertakes, in the plan, to maintain the payment of R$ 600 to beneficiaries of Auxílio Brasil — one of “the priority commitments of the re-elected government”, according to the document registered with the TSE. Payment would take place from January 2023.

The president, however, did not present sources of revenue for a new round of the program, which, in order to guarantee votes during the election, incorporated more beneficiaries and was expanded by R$200, reaching a total of 20 million families.

Despite the rampant spending, Bolsonaro says he intends to reduce public debt. Due to spending on the pandemic and the president’s electoral measures, the country’s indebtedness has reached a level equivalent to 78% of GDP.

The index is practically the same recorded at the beginning of the pandemic, but has been reduced due to the effects of inflation and the resumption of economic activity.

The country, however, needed to increase its debt by issuing bonds to finance government actions to contain the damage caused by the pandemic, above all, and guarantee jobs.

Among them, Bolsonaro mentions BEm (Emergency Benefit for Employment and Income Maintenance) as the “largest job preservation program in the history of Brazil”.

“There were more than 11 million jobs preserved during the pandemic. More than 1.5 million companies used the program, being about 70% micro and small companies”, says the text.

“The biggest job preservation program in the country’s history was hundreds of times bigger and more comprehensive than previous governments.”

There is no record of similar programs in other governments. None of them faced a pandemic like the coronavirus.

To this end, the Union gave up tax revenues, which contributed to the budget squeeze.

In 2021, the economy started to grow again, inflation soared and there was a reduction in expenses and an increase in revenues with the help of a mini boom in commodities – the public sector accounts have been in the black since last year.

Currently, projections point to a debt/GDP of 81% at the end of 2022, reaching 86% between 2025 and 2029, falling to 84% in 2030.

Bolsonaro, however, is not committed in the government plan to present any type of fiscal anchor, a kind of parameter for the debt reduction market.

There is no line in the document addressing the government’s ongoing plan to end the spending cap, a measure that corrects the following year’s expenditures for the previous year’s inflation.

On the contrary: in his plan, the president talks about de-indexing the Budget, something that, in practice, transfers all types of execution of government expenditures to Congress, without the constraints of mandatory spending.

The only control valve that Bolsonaro is willing to respect is the inflation target, which is defined by the Central Bank. He also states that he will respect the regulator’s autonomy, something guaranteed by law.

For the reactivation of economic activity, the president proposes more flexible labor rules, reducing the bureaucracy of the business environment and government bodies, measures that, according to the Executive’s own projections, have already been carried out and allowed companies to save R$ 200 billion, money that, according to the government, has been converted into more jobs.

In an eventual second term, Bolsonaro intends to accelerate these reforms and stimulate credit for entrepreneurs through the SIM Digital program.

In addition to offering guarantees in the contracting of loans, this program encourages the formalization of companies. Today, 40% are in the informal sector. The idea is to offer more money to those who are willing to collect Social Security contributions. This program is already underway and relies primarily on a partnership with Sebrae (Brazilian Service to Support Micro and Small Enterprises).

Another unfulfilled promise, Bolsonaro redoubles his bet on the liberal project of his minister Paulo Guedes to privatize state-owned companies to “reduce the size of the state”. Despite this, he does not list any public companies to be sold.

During his administration, Guedes said he would raise more than R$1 trillion from the sale of state-owned companies. Reality imposed itself and Bolsonaro was only able to privatize Eletrobras.

In the field of privatization, the only success of his government was the PPI (Investment Partnership Program), which Bolsonaro intends to maintain to attract private investment.