Necessary reforms
Source: DCI - SP - 28/07/2009
In the coming years, Brazil has the chance to reach growth levels much higher than those observed in the last decade. This is because the infrastructure works necessary to host the 2014 World Cup, combined with those already underway with the Growth Acceleration Program (PAC), may attract large amounts of foreign capital, enabling not only the country's development, but also the expansion of employment and income.
Notwithstanding, the current drop in basic interest rates, now at 8,75% per year, has significantly reduced the cost of capital in the country, which possibly will make large multinationals, once resumed with external breath, look again at the Brazil as a great opportunity for growth and gain.
Another favorable point for our country is the domestic market. Like the vast majority of emerging countries, we have a population eager for new things and with a relatively low indebtedness vis-à-vis rich nations, such as Europe and the United States, enabling the expansion of credit.
However, there is a point that needs to be addressed urgently. With the cut in interest rates, Brazil's high tax burden and its confused tax system gained even more prominence over the cost of investments in the country. Therefore, more than ever, the Brazilian government will face the difficult task of approving the tax reform.
But for such a reform to give results, another reform becomes even more urgent: that of the public machinery. It was more than evident, with the drop in revenue due to the crisis and the exemptions granted, that the government depends on taxes to sustain its excessive spending. Therefore, a tax reform that reduces the tax burden may make the functioning of the public machinery unfeasible or seriously compromise our public accounts, which cannot occur under any circumstances.
It will then be up to the government to reduce its spending, because even if the current reform does not mean a cut in the tax burden, as has been heard, one of the determining points for growth in the coming years will also be public sector investments, which can be unviable in view of current spending.
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Necessary reforms
Author: Miriam Leitão
Source: Good morning Brazil, 29/05/2007
Miriam Leitão is back from vacation with the comment on the homework Brazil is leaving for later. With the economy in boom times, it's time for reforms.
Current advances have three reasons: the good international situation; reforms made in the 90s; and the Lula administration's successes in economic policy. Brazil has changed a lot since 90. The opening of trade allowed imported products to come. The drop in inflation allowed the consumer to compare prices.
All of this increased competition between companies. Whoever was not more efficient, died. The privatization of mining, steel, telephony and energy distribution has shocked productivity in the economy. Brazilian companies became more competitive and were able to ride the wave of world growth, which has lasted five years.
Yesterday, at an event of the steel sector in São Paulo, President Lula said that Brazil is "about to achieve perfection in monetary policy. But Brazilian interest rates are still the highest in the world. That is, it is far from perfect.
But the Lula government got it right by not making changes in economic policy that could threaten stability. Once this risk is overcome, the country can grow again. The problem: Brazil is now spending what it accumulated before. And it is not accumulating anything for the future. There are no reforms, there is no agenda.
What does the government really intend to propose to Congress? It is not known. And if he does, will Congress pass? In this confusion that Congress is in, hardly. A reform is needed to reduce the cost of hiring workers.
The country's unemployment rate is 10% and half of the workers are in the informal sector. But the biggest enemy of any change is the Minister of Labor himself. It is a pity, but the government is wasting the best chance of sustained growth.
The remedy is not less democracy, but more democracy
What happened in Venezuela with the closure of RCTV, after 53 years on the air, is proof of the nine from the Hugo Chávez government. If anyone had any doubts about the authoritarian character of the Chávez government, now there is no more.
He has been trying, since the beginning of the government, to intimidate the press and occupy all media with his government's propaganda. In the first hours of the new state broadcaster â € “there are already others â €“, what was broadcast in the advertising space was only Chávez's propaganda.
A region that has faced so many dictatorships in the past, where democracy is recent and still fragile, cannot take the risk it takes with the example of Hugo Chávez. For the Venezuelan dictator, what he does in his country is not enough - he wants to spread the same model to the countries over which he has influence.
Brazil should look at what happens there as an example of what not to do. We need to continue to improve democracy. The risk here is that corruption undermines people's confidence in institutions.
The remedy is not less democracy, but more democracy: more transparency in public spending, more ways of auditing and monitoring the decisions of politicians. For all this, freedom of the press is indispensable.
