Brazil Economy Chief Says Private Sector Will Propel Recovery
Brazil Economy Chief Says Private Sector Will Propel Recovery
(Bloomberg) -- Brazil’s private sector will drive the nation’s recovery from the coronavirus pandemic, Economy Minister Paulo Guedes said amid signs he is getting the upper hand in a struggle over the federal budget.
The government won’t spend to bail out large companies, and previous large-scale infrastructure programs driven by public spending didn’t work, Guedes said on Wednesday during an online event with retail sector executives. The nation’s Congress backs economic reforms, he said, adding that he has President Jair Bolsonaro’s full support.
Bolsonaro’s administration has arrived at a crossroads for economic policy that’s pitted Guedes against other officials and politicians who are calling for more stimulus amid the coronavirus pandemic. Last week, Bolsonaro’s Chief of Staff Walter Braga Netto unveiled a 10-year plan entailing at least 30 billion reais ($5.4 billion) in public spending, though the president later determined that the proposal is restructured to conform with Guedes’ fiscal strategy, according to people familiar with the discussions. At stake is the strategy for helping an economy that may contract 5% this year.
Brazil may reduce its stock of international reserves to cut debt, but not to build infrastructure, Guedes said. The government is allowing the Brazilian currency, which has lost more than 25% against the U.S. dollar so far this year, to find its equilibrium point, the minister said, adding that he still has the same determination and enthusiasm as always.
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