Head of the Special Advisory for Strategic Affairs at the Ministry of Economy since February, after passing through the Secretariat of Economic Policy (SPE), economist Adolfo Sachsida has been with Jair Bolsonaro since the 2018 election campaign.
He says that, if the president is re-elected, the agenda will follow the same: fiscal consolidation and pro-market reforms to increase productivity, and that it is necessary to insist on policies such as privatization.
To critics, he replies that Brazil will grow more than the market is expecting in 2022. Read the main excerpts from the interview below:
The government is betting on private investments that were contracted to boost GDP in the coming years. It will work?
We made changes in the economic policy for private investments. The first is the change in the concessions rule. Today, whoever promises the best investment wins and the role of the grant is in the background. We already have BRL 1.33 trillion in investments under contract, and BRL 356 billion by 2025. For 2022, it is BRL 78.1 billion, almost 1% of GDP. In addition, there are R$130 billion in grants that we have received. The second change is related to credit. In December 2015, 51% of the credit was free. Today, it’s 60%.
And what’s the advantage of that?
There is an expansion of possibilities, financing productive investments, and not those chosen by the government. Another change was the privatization of credit. In December 2015, private banks participated in 44% of the credit; today, 57%. Private investment is financed by free credit via private banks. In the past, it was via public banks.
From a macro point of view, what does this represent?
We created 14 financial instruments. It is a revolution in credit, capital and guarantees. When we arrived, there was a discussion about whether Brazil would grow a lot or not, given the decline in GDP. The literature shows that, depending on the type of shock, economies permanently lose 5% of GDP per capita, and this is related to guarantees.
What lies ahead on the economic agenda?
What we do is work to improve the design of financial instruments. For example, the digital CPR (Cédula de Produtor Rural) made use of an important change that was the GovBR. I draw attention to the Letter of Insurance Risk (LRS). This instrument is very famous abroad. It will irrigate the insurance market with the capital market and spread risk. One agenda that we are working on is the insurance market, which, with the approval of the Guarantee Management Institution (IGGs), will have a boom.
What can you expect if the president is re-elected?
The same agenda: fiscal consolidation and pro-market reforms to increase productivity. The market can be absolutely sure; we will continue with the agenda that has put the entire country of the western world on the path of prosperity, consolidating the fiscal side.
What is consolidating the fiscal side?
It means respecting the spending ceiling, continuing to reduce the government’s expenditure-to-GDP ratio, moving towards a path of public debt stability, continuing with the policy of returning excess revenue to the population. We still have a broad pro-market agenda to work on. For example, it is essential to improve the efficiency of the electricity sector. I’m sure as soon as this discussion moves forward, we’ll improve it.
Improve how? Selling Eletrobras?
It’s a part. Selling Eletrobras is a priority for our government. We have to insist on the privatization and concessions agenda. Now, in addition, there are some misguided designs that have been made in the past in the energy market. This market needs to make sense again.
Many believe the economy could harm the president’s re-election.
We will see. Now it’s my turn to tease. The economy will grow more than the market is expecting in 2022, employment will continue to grow and private investment will continue to come. We’ll give the answer on the field as usual.
The information is from the newspaper. The State of São Paulo.
