Finance Minister: Economic recovery in 2017 will bring back job creation

Finance Minister Henrique Meirelles said Monday (Oct. 31) that, as confidence in Brazilian economy grows, there are indications that the country will grow again in 2017. In an exclusive interview on A Voz do Brasil, a radio broadcast produced by Empresa Brasil de Comunicação (EBC), Meirelles said that employment will grow as an “natural and inevitable consequence” of economic growth.

“There are many indications that we will really see the economy grow next year,” the minister said in the interview.

Meirelles insisted on economic reforms to pave the way for growth. “Brazil needs to reform its economy in order to grow and create jobs and income for the population, and reduce inflation.”

Limiting spending

In the interview, the minister maintained that a constitution amendment bill to limit government spending, which has recently been approved by the Chamber of Deputies and is now pending before the Senate, will not reduce investment in education and health. If the bill is approved, effective for the next 20 years, government spending in each year will be limited to the official inflation rate of the previous year.

“Actually, what it [the bill] establishes is a minimum level of health and education spending that is above the existing minimum. The government and Congress may even approve higher spending. So investment in these two key areas will be preserved,” he said.

Regarding the consequences of the bill for the government budget in 2017, the first year it will be in effect if approved by the Senate, the spending cap will have no immediate impact on education—instead, an existing constitutional requirement that the government spend 18% of its revenue on education will be applied. The share of the budget that will go into health in 2017 will be 15%, instead of the current 13.7%. As of 2018, the minimum levels of spending on education and health will go up each year based on the previous years' inflation.

“Suppose a family starts spending more than it earns, so it increasingly takes out loans. This bill limits how the spending will increase over time just like a family that spends more than they earn,” the Finance Minister compared.

He again said the government will not need to increase taxes if the bill is approved. “We would need to increase taxes if spending continued snowballing. But when the government cuts in its own flesh, as President Michel Temer says, it eliminates the need to raise taxes.”

Translated by Mayra Borges