Inefficiency, Not Money Woes, Limits Brazil, Silva Adviser Says

(Bloomberg) -- Brazil’s problem isn’t a lack of money, but the unjust and inefficient management of public resources, according to economist Ricardo Paes de Barros, one of the architects of the Bolsa Familia benefit program.

Now an adviser to third-place presidential candidate Marina Silva, Paes de Barros said Brazil had regressed "three or four years" in terms of tackling poverty due to its worst recession on record and the tepid growth that followed. Still, he argues that Brazil acted swiftly. "It could have been a lot worse," he said.

Bolsa Familia, the conditional cash transfer scheme regarded as one of the major successes of the administration of former President Luiz Inacio Lula da Silva, would remain a priority for Paes de Barros in government. While praising its current format, he said that it needs to be better targeted toward the truly needy. "Brazil spends 40 percent of its GDP, while other countries spend a lot less," he said. "Bolsa Familia costs around 1 percent of GDP and it does a wonderful job attending to the poorest."

For the economist, poverty levels have not risen as dramatically as unemployment, but he says that further reducing the number of poor in Latin America’s largest economy would require a serious reform of the education system. "Today, the poor pay to study at university and the wealthy do not," he said.

He also believes that the benefit system for disabled or elderly Brazilians needs to improve, potentially in exchange for reducing the salaries paid to public sector workers. "The inequality in the public sector is dramatically higher than in the private sector," he said. "Someone has to see whether this is justifiable."

Searching for Agreement

The latest Datafolha poll put Marina Silva in third place, but the survey also showed a marked downward trend in her support since August. In the event Silva wins, Paes de Barros is conscious of the challenges he will face implementing his ideas, especially given the tiny size of Silva’s party, Rede Sustentabilidade.

But he says that it should not be hard to reach agreements across the aisle. "No one is in favor of millions of unemployed or the number of murders now taking place daily in Brazil," he said. Bolsa Familia and the public heath service, known by its Portuguese acronym, SUS, are widely supported across the political spectrum, he added.

In order to better meet the needs of Brazil’s poor, the state needs to be more attentive to their concerns, via its state and municipal representatives, Paes de Barros said. "That way we will know what are the real necessities and invest in future in a more efficient way."

To contact the reporters on this story: Rachel Gamarski in in Brasilia at rgamarski@bloomberg.net;Simone Iglesias in Brasília at spiglesias@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Bruce Douglas, Robert Jameson

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