‘I have no intention of holding positions in Brasilia’, says Persio Arida

Economist Persio Arida said this Friday (25) that he has no intention of assuming positions in the future government of Luiz Inácio Lula da Silva (PT) in Brasília, which would leave him out of the command of any ministry.

Persio says he never received an invitation to be Minister of Planning and form a partnership in the economic area with Fernando Haddad at the Treasury — a plan commented on by PT members in recent days.

“For personal reasons, for my moment in life, I have no intention of holding positions in Brasilia,” said Arida in an interview with Sheet by phone and text message direct from the UK, where he is about to give a lecture at the University of Oxford. “This supposed invitation is nothing more than a daydream of some news agencies”.

As published by Sheetdespite the supporters, PT members were already questioning Persio’s “yes” in Planning and had been studying alternative names from the party itself for the command of the portfolio.

Persio has stayed out of the spotlight. One of the fathers of Plano Real, former president of the Central Bank and member of the Editorial Board of Sheethe is part of the government transition group in the economy, which has the task of producing a diagnosis of the area.

The group’s meetings, which also include economists André Lara Resende, Nelson Barbosa and Guilherme Mello, are constant, although most take place virtually.

With regard to the discussions on the revision of the Budget for 2023, carried out in Congress by the political wing of the coalition that elected Lula, Persio’s assessment is that next year’s expenses may be constant in relation to the GDP projection (Produto Interno Gross).

“Questions of legislative technique —whether a PEC is better [proposta de emenda à Constituição] or an extraordinary credit—transcend my sphere of competence”, he said. “As far as value is concerned, I think we should have a criterion that reconciles social responsibility with fiscal responsibility.”

The amount of expenses to be kept outside the ceiling to pay for Bolsa Família of R$600 and other PT campaign promises, and for how long this would be authorized, is the main divergence between the elected government and Congress in the Transition PEC.

By current parameters, the figure left outside the ceiling would tend to be R$ 135 billion, says Persio, well below the R$ 198 billion estimated by PT negotiators, who include extra revenue for investments in the account.

Value similar to that mentioned by Persio was mentioned by Nelson Barbosa. On Monday (20), Barbosa stated that extra spending of BRL 136 billion in 2023 would not mean a fiscal expansion compared to 2022.

The PT’s political wing tries to get four years of validity for expenses outside the ceiling, but congressmen resist, and speak of two years – which the PT has already been admitting as possible.

Mr. Will you accept to be Minister of Planning? This supposed invitation is just a daydream of some news agencies. It was widespread and the chimera ended up being taken as if it were true. The fact is that I didn’t receive any invitation or any poll to be Minister of Planning or Finance. For personal reasons, at the time of my life, I have no intention of holding office in Brasilia.

Mr. do you agree with a PEC of almost R$ 200 billion? Questions of legislative technique —whether a PEC or an extraordinary credit is better— transcend my sphere of competence. With regard to value, I think we should have a criterion that reconciles social responsibility with fiscal responsibility.

Mr. Do you have a criterion suggestion? For 2023, the criterion I propose is to keep public spending constant in relation to GDP. The value resulting from this criterion depends on the projection for the 2023 GDP, which will certainly be affected by the global situation, and also on a possible recalculation of the 2021 GDP by the IBGE [Instituto Brasileiro de Geografia e Estatística]🇧🇷

By my calculations, it would be substantially less than R$200 billion.

It is a criterion that can be criticized. There will be those who say that public spending should grow more than GDP to meet the social demands that enshrined the will of the people at the ballot box. There will be those who say that they should grow less to help bring down inflation and interest rates. Both objections are true. But it is a criterion that seems good to me to reconcile social and fiscal responsibility.

Our demands and shortcomings are enormous and can only be equated over time. Still in 2023, we must advance in the discussion of a new fiscal framework that replaces the current spending ceiling and is compatible with the sustainability of the public debt over time.

Mr. would it have a value? If there is no revision of the 2021 GDP and assuming a 2.5% GDP growth next year, we will have something close to R$ 135 billion. With a more pessimistic estimate of growth, the extract would certainly be less than R$ 135 billion. It is important to note that this extract amount is lower than the extract amounts for any of the four years of the Bolsonaro government, even excluding spending on the Covid-19 pandemic.

The question of the term for the extract is another impasse🇧🇷 Mr. Do you work with a deadline? Authorization for additional spending should be for two years, that is, until the end of 2024. I assume that the discussion of the new fiscal framework could take the whole of 2023 and perhaps extend to 2024. If we already have one new fiscal framework in force in 2024, the extract would have its duration abbreviated to just one year.

X-RAY – Persio Arida, 70

Born in the city of São Paulo, he holds a degree in Economics from USP (University of São Paulo) and a PhD in the area from MIT (Massachusetts Institute of Technology) (USA). He was a professor at PUC-RJ and USP, working as a researcher at the Institute for Advanced Studies in Princeton (USA), at the Brazilian Study Center at the University of Oxford (UK) and at the Smithsonian Institute, in Washington (USA). He is one of the fathers of Plano Real. He was president of BNDES (National Bank for Economic and Social Development) and BC (Central Bank). In the private sector, he was one of the founders of Banco BTG, currently BTG Pactual, in which he ceased to hold a stake in 2017. In 2018, he was coordinator of the government program for the then PSDB presidential candidate, Geraldo Alckmin.