Will the appointment of Fernando Haddad help to reduce the sururu that is beginning to poison economic prospects for 2023? By itself, no. Haddad or an unlikely alternative “x” will have to run after unnecessary damage, caused in the last month by the Lulian political command. But much can still be remedied.
The money’s owners expected an early definition from the chief minister of the economic area and, thus, reasonable guidelines at least to fix the horrible situation of the government’s accounts. There was no early definition. The economy soured. Crucial economic decisions were taken without even the transition economists being heard. See the size of the Transition PEC spending package.
In addition to the task of repairing the damage caused by the government of darkness (2019-2022), the future Minister of Finance will also have to remove this debris left by the political command of the transition. That is, a higher-than-expected deficit and debt increase, absence of guidelines regarding the new debt containment rule and, as a result of all this, expectations of higher interest rates and inflation for 2023.
It is possible to remedy many things because, in a bad world scenario, Brazil can be attractive. A civilized government can reinforce that interest and stabilize a country torn apart by four years of savagery.
Furthermore, the approval of the package that authorizes additional expenses of at least R$ 169 billion does not necessarily mean that all this money will be spent. A responsible finance minister can dose the expenditure, depending on the progress of GDP, tax revenue, interest and inflation.
But, to begin with: a Haddad and a swallow just don’t make a summer. It is not known what the possible future Minister of Finance thinks, in a systematic and explicit way. If you make a pitch with sensible guidelines and, very important, name your team, at least your top three secretaries, in a way you will be saying what you have in mind and showing how capable and autonomous your administration can be.
To continue, naming your team can help make up for lost time. Even though the transition group in the economy has advanced diagnoses, developing measures takes work: study, design, testing and political authorization to run the thing.
Finally, it is necessary to analyze the size of Haddad’s power. The Ministry of Economy is a monstrous and meaningless giant. It will be sliced. What important policies and institutions will remain outside the purview of Haddad, from the Treasury? Or with someone of different thinking?
Part of the institutions related to “development policies” (God help us) should end up in a new Ministry of Development, Industry and Foreign Trade (MDIC).
The political command of the transition says that the BNDES will go to the MDIC and that the bank would be a pilot of the reindustrialization policy (which can be anything, good or bad). More than that, they seem to have woken up to the zombie idea of creating special interest rates in order to finance investment (often just a means of lowering the cost of capital for companies, without any gain in investment or economic efficiency).
The Ministry of Planning must be recreated. Will it go back to being responsible for preparing the Budget or would it just be a Ministry of Administration?
The stronger MDIC and Planning and their respective ministers are, the more difficulties the Treasury will have. It is a history full of friction, since the 1960s.
That said, Haddad or Minister X can still fix the damage caused by the transitional government.
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