Brazil is almost bankrupt, says Arminio Fraga Por Estadão Content

© Reuters. Country is almost bankrupt, says Arminio Fraga

Economist Arminio Fraga, former president of the Central Bank, stated on Tuesday, 14, that, quantitatively, the Brazilian state is in a pre-bankruptcy situation and that it is necessary to rethink public spending priorities to change this situation. “Something needs to happen, because today these priorities mirror the capture of the State, the national political system”, he highlighted, at an event of the group ‘Dumping Walls’, a movement that brings together businessmen, investors, politicians and intellectuals in opposition to the government of Jair Bolsonaro .

For Arminio, the international comparison shows that the Brazilian state is large for a middle-income country. Assessing pre-pandemic data, spending was between 30% and 35% of the . In this scenario, expenses rise and investments fall. “Brazil has a characteristic outside the global curve. Almost 80% of its resources are spent on payroll and social security. This number surpasses by 20% the top of other countries.”

Added to this is the fact that the primary deficit has been negative since 2014. This means that Brazil is borrowing money to pay interest, which further increases the debt, which is now above 90% of GDP. “This is a high number for a country with our history.” In Arminio’s assessment, at some point it will be necessary to face the problems head on and rethink spending priorities. Bringing the primary balance into positive territory will not be enough to balance the situation, said the former BC president.

But he said he believes that a good government with a designed project will be able to put the country on the path of growth. Today, says the economist, there is room to grow in all areas and improve services. “We need to evolve a lot. We have been experiencing very low growth for 40 years, even at the best of times, like FHC and Lula (1st government). The question we have to ask is why we, as a nation, are unable to organize ourselves and do things better. things in an inclusive and sustainable way?”

Regarding the reform of the State, Arminio stated that he believes it is possible to tackle the problem quickly and effectively with existing instruments. One of these paths is in the Constitution and would allow the evaluation of public servants. “I can’t understand how you don’t evaluate a public servant. This has been waiting for 23 years.”

The economist said that, in general, the state plans very little, manages poorly and hardly evaluates. “It is essential to create a culture to justify everything that is done. It is necessary to strictly manage and evaluate. Brazil needs an HR model to improve things.”

Traditionally optimistic about the country’s political and economic issues, Arminio says that unfortunately “we’ve reached a point where we have to rely a little more on luck to make things right.” But he still believes there is time to find a third way, even if it is to improve the electoral debate. “In the short term, it’s not to despair, but you have to worry for sure.”


At the same event, the head professor at FGV Direito, in São Paulo, Carlos Ari Sundfeld, also defended the reorganization of the Brazilian State, something that will be necessary to integrate the agenda of the next government. “It is necessary to reorganize the Brazilian State so that it is actually directed towards economic development. We have to uncomplicate our public world,” he said.

For him, social assistance programs need to be accessible, but they need to undergo modernization and simplification. “Simplifying the set of services will show that many people receive extraordinary benefits and people who need it much more and who don’t,” he said.

Economist and former director of the National Privatization Program under Fernando Henrique Cardoso, Elena Landau, defended that Brazil should work towards a progressive liberal state, something that during FHC’s government proved to be possible to achieve. “We want a progressive state, socially inclusive, with social mobility, digitized. There is also the question of culture, which is being undermined in this government. There is no nation without culture, without memory.

The information is from the newspaper O Estado de S. Paulo.