Ceiling was pierced within the context of a pandemic and won’t be pierced on a regular basis, says Guedes

“Brazil is condemned to grow”, said the minister

The Minister of Economy, Paulo Guedessaid there was a lot of pessimism about Brazil’s fiscal situation, but the government is achieving its first annual primary surplus since 2013 and the roof was violated due to the emergency of the pandemic and won’t be bored all the time.

The ratio between gross debt and gross domestic product (GDP), which analysts predicted would exceed 100%, is now at 78.2%, Guedes told a packed auditorium at the XP event on Wednesday.

“We are going to use state dividends and maintain the primary surplus,” said the minister. “When we are asked if we have violated the ceiling, the answer is yes, because the ceiling prevents the government from investing,” said Guedes, stating that this occurred because of the extra expenses required by the pandemic, an unforeseen situation.

“We are not going to die for a principle of austerity, we are going to respect it,” said the minister. “We’re not going to pierce the ceiling all the time.”

Guedes said he belongs to a generation where it took 15 years to resolve a fiscal crisis in Brazil. Now, in about a year and a half, it resolves itself. “We made a strong fiscal; we did not subsidize gasoline, we reduced taxes,” he said.

“Invisible Administrative Reform”

The Minister of Economy stated that the government carried out an invisible administrative reform, with the digitization of services, in addition to a silent tax reform, with the reduction of taxes. The statements were made during XP’s Expert event.

Guedes also declared the tax reform needs to be completed by the Senate. According to the proposal approved by the Chamber, there will be taxation of dividends, correction of the personal income tax table (IRPF) and a drop in rates for companies.

The minister also took stock of the government’s achievements, stating that several trade agreements were signed in the last three years and that import tariffs were reduced for the first time in the last 40 years.

Among them, Mercosur signed a free trade agreement with Singapore and the countries of the South American bloc reached a consensus for a 10% reduction in the Common External Tariff (TEC).

“The economy is advancing in all dimensions. Sometimes politics blocks one path and we go the other. Brazil is doomed to grow. We have R$ 890 billion in investments already contracted for ten years. We have 3 million formal jobs since rock bottom,” he said.

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