Opinion – Vinicius Torres Freire: Roll at Petrobras, server readjustment and tax drop could spoil 2023

The election campaign, economic fantasies or blatant demagogues can cause sinister problems for those who will govern from 2023 onwards. “political willpower” will solve the shortages and lack of investment that have helped to cripple the country since at least 2014. I think not.

The campaign has barely begun and there are already plans for employee increases, ruinous ideas for Petrobras and crazy tax cuts, a joke sung by the government and by presidential candidates who detest the government.

Consider the case of Petrobras. Assume that the ideas of fixing its prices and forcing the company to build new refineries on the fly are not in themselves a problem for the company (yes, we are in the realm of fantasy). Well managed, Petrobras is a cash cow, it makes a lot of money for the government, as does the entire oil business. If the company stops making a profit (if it doesn’t make a loss), the government loses tens of billions of revenue. The 2021 dividends alone will yield BRL 37.3 billion for the government.

This is the equivalent of 42% of this year’s expenditure on Auxílio Brasil. By the way, Auxílio Brasil, now at R$ 400, will drop by half in 2023. It will be necessary to find money to pay this little money that prevents the hunger of 18 million families. From where?

The big electoral debate so far is the price of fuel (there is less talk about gas cylinders, which is really poor thing). In order to lower the price of gasoline and diesel by fifty cents, it would be necessary to give a subsidy of at least R$52 billion reais per year, about half of Petrobras’ profit in 2021, probably extraordinary.

A constitutional amendment sneaks into Congress. It allows the return of the quinquennium, an automatic readjustment every five years, for the Justice and Public Ministry personnel, who do not exactly earn poorly. Amendments have already appeared to extend the benefit to all servers. Judges in general, state and federal, lobby for some readjustment.

Central Bank officials decided to strike from April 1st. Some careers at the Ministry of Economy are thinking about stopping. Jair Bolsonaro had promised raises for federal police officers. The favor for his electoral base in the police irritated the other servers, without readjustment for a long time, but who had been silent since the epidemic.

There is no budget forecast for readjustments. Given the limit of the spending ceiling, even when demoralized, it is not possible to make a gambiarra that allows increases. Perhaps there is no time, considering the political, electoral and legal calendar, although Bolsonaro’s accomplices in charge of Congress may even approve the reform of nature, overnight, in a dawn of tractors in the plenary.

Bolsonaro cuts taxes: IPI, PIS/Cofins on fuels, etc. He says that he “returns resources to society”, as government revenue has increased beyond what was expected. It’s idiotic. There’s no money left. The government has a deficit and will pay interest of at least 12% a year to finance it (to the rich, by the way).

By 2023, a good government would have to make a profound change in government spending and revenue: spend less on this, more on that (hunger, health, school, some investment, science), raise taxes, change several of them, create new tax rules and believable. To get out of the mud, we need huge changes. In the realm of fantasy, government and candidates only plan to create a fiscal problem that will have sinister consequences.