Vice President Michel Temer presented a document with proposals for economic growth drafted by his Brazilian Democratic Movement Party (PMDB) during a meeting with journalists on Thursday (Oct. 29).
The paper criticizes the government for indulging in spending “excesses” in recent years, which led to a “fiscal imbalance”. The “current deep recession”, according to the authors, began in 2014 and should last into 2016. “Considering the situation, we seem to be headed for a long period of stagnation, or even a decline in per capita income.”
Titled "Uma Ponte para o Futuro" (“A bridge to the future”), the text was drafted by Fundação Ulysses Guimarães (FUG), a foundation linked to PMDB. It pointed out the country's challenges would demand both emergency measures and “structural reforms”—a task they claim is not to be accomplished by “financial experts”, but by politicians able to “set differences aside” and establish priorities among long-term issues.
The proposals, gathered into 19 pages, were emailed to members of the party for discussion and input ahead of the FUG National Conference on November 17.
The authors criticized tax increases, stating that “any long-term adjustment should fundamentally avoid raising taxes except strictly in emergencies.” It went on to advocate giving the Legislature a larger role and more authority to discuss the annual budget.
It was suggested that the society and Congress establish priorities for pursuing fiscal balance based “on the resources and the needs”, and any mistakes should be corrected the following year.
“Overcoming the crisis will require great legislative effort to fix distortions and lay the foundations for a virtuous State operation. This means confronting strong, organized interests that are often well represented in the political arena.”
The federal government was condemned for excessive spending in recent years, “by creating new programs or expanding existing ones, hiring new staff, or committing investment beyond the State's fiscal capacity.” The suggested measures include “ending constitutional bindings” that govern expenditure on health and education, and setting up an independent committee to assess government programs each year and decide if they should continue.
Welfare and interest
As solution to the growing social security deficit, the politicians suggest raising the minimum retirement age from the current 65 years old for men and 60 years old for women. They also advocate no longer indexing welfare and pension benefits to the minimum wage as an “indispensable” measure.
The interest hike was pointed out among the causes of the high inflation rate that remains persistently above the target. “Such high interest rates impair our ability to grow, impact investment levels, and result in a perverse income distribution,” the document read.
Fiscal adjustment was advocated as “not a goal in itself”, but a step that should necessarily lead to economic growth, otherwise the measure would be pointless. The document also suggests the private sector should be more “effectively” engaged in construction and infrastructure to help drive growth.
“In recent years, growth has been driven by extraordinary gains in the foreign sector and increased household consumption, boosted by an improvement in personal income and an expansion in consumer credit. These resources have been exhausted, so a new growth cycle should rely on private investment and greater global competitiveness both in agribusiness and in industry,” the document concluded.
Translated by Mayra Borges
Fonte: PMDB party circulates document with proposals to revive growth