Brazil: Starving at Home to Fatten Speculators

Brazil: Starving at Home to Fatten Speculators

    The Brazilian economy continues to be the cave of Ali Baba
    transformed into a motel,
    where speculators arrive in the
    afternoon, spend the night and check out in the morning after
    the national treasury a little further. They invest $100
    thousand one day and get away with $180 thousand the next.


    Carlos Chagas


    The administration’s goal, according to what we hear from Banco Central, is to reach the end of the year with an
    interest rate of about 17 percent. This is great news, considering the 24 percent we have experienced in the past. It is also
    regrettable news, however, if we compare this rate with the world average, which includes not only developing countries but also
    the underdeveloped. In terms of interest rates today, Brazil loses only to Turkey.

    The economic team in Brasília keeps touting the benefits of slow, gradual but safe reductions, which is fine. There is
    a problem, however: if the reduction pace remains as it is, the only hope for crossing the threshold of the rest of the world,
    i.e., no more than 1.5 percent, will be to wait for the end of the Lula administration. We are talking about one presidential
    term, of course.

    The Brazilian economy continues to give the impression of being the cave of Ali Baba transformed into a motel,
    where speculators arrive in the afternoon, spend the night and check out in the morning after raping the national treasury a
    little further. Having invested $100 thousand on a given day, they can get away with $180 thousand on the next.

    Even worse is the announcement by the government
    of a primary surplus of 20 billion for the current year, attributed
    to budget cuts and reductions in indispensable items such as health, education and infra-structure projects. It is worse
    because these 20 billion will actually be used to remunerate speculators and pay interest on our foreign debt which, by the way,
    continues to multiply.

    From a figure of 70 billion in the beginning of the Fernando Henrique Cardoso administration, the previous
    President, in 1994, Brazil’s debt was calculated at 700 billion at the start of the Lula administration on January, and it keeps
    growing. How about some change?

    Understanding the message

    In the last few days, all speculation ceased within PMDB (Partido do Movimento Democrático Brasileiro—Party of
    the Brazilian Democratic Movement) and so did expectations about the party’s inclusion in the upcoming cabinet
    appointments. Nothing has actually changed, of course. Still standing is the promise made by President Luiz Inácio da Silva to appoint
    members of PMDB in direct proportion to the support given to government projects by the party’s congressional blocs.

    The reason for the silence actually resides in a recent statement by Lula that we need first to have the welfare and tax
    reforms finally approved by Congress before we can move along to anything else. Until the constitutional amendments are
    promulgated and the respective laws ratified, there will be no deal. It’s not a question of the President not trusting the PMDB;
    quite the contrary. The recent rounds of voting in both House and Senate have demonstrated the fidelity of the party’s blocs to
    the commitment made in September. Nonetheless…

    Nonetheless, the President of the Republic behaves like one of his very first predecessors, Marshall Floriano
    Peixoto, the one that confiava desconfiando
    (trusted while mistrusting). Yes, he will be appointing cabinet members from within
    PMDB ranks—at least two of them—and he probably already knows the exact positions to be filled. However, the man is not
    talking until all reforms have passed in the Congress.

    The peemedebista chiefs, meanwhile, suffer in silence. Some are unable to sleep, others can hardly eat. A few have
    decided to resort to prayer, others to cursing. And that’s the way it is. Have a weak stomach? Don’t venture into politics.

    Unification in scarcity

    No one can criticize the government’s initiative to unify all social programs into one. In addition to the great deal of
    confusion regarding the many different benefits, there are actually people getting too much and others getting too little. It’s going
    to take a long time to achieve a unified system, but the Brazilian people see the effort as worthwhile and like the idea of
    creating one single special secretariat to replace all conflicting ministries or at least reduce their number in the future.

    What has been really hard to understand, however, are the efforts undertaken by President Lula to secure a R$ 700
    million (US$ 250 million) loan from the Inter-American Development Bank in order to spearhead the unification project. Yes,
    the idea is to subsidize the interest and schedule payments far away into the future, but we are still talking about a loan,
    which will need to be paid back—adding to the ones we already have with foreign creditors.

    Well, the administration has announced that the primary surplus will inch toward the 20 billion mark. Why is it,
    then, that the economic team has not thought about deducting these 700 million from the huge amount of funds it has been
    saving at the expense of prioritary social investments such as health and education? We could at least avoid increases in the
    foreign debt, since the bulk of the primary surplus is used to pay the interest, as no one would deny. Such is the state of affairs
    in a neo-liberal economy…

    This article appeared originally in Tribuna da
    Imprensa –


    Carlos Chagas writes for the Rio’s daily Tribuna da
    Imprensa and is a representative of the Brazilian
    Press Association, in Brasília. He welcomes your comments at

    Translated by Tereza Braga. Braga is a freelance Portuguese translator and interpreter based in Dallas. She is an
    accredited member of the American Translators Association. Contact:

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