The privatization of state-owned enterprises in Brazil would produce more money than the combined sum raised by all governments since 1990. The largest country in South America is getting closer every day to realizing the plan proposed by the economic minister to free the market.
According to a study by the Estadao newspaper, the government’s privatization program could generate up to 450 billion Brazilian reals or 119.8 billion USD.
Despite the initial resistance, the parliament has just approved the most controversial and at the same time necessary economic measure to reduce state spending and give money back to the citizens: the cut to the state pensioners’ fund, which occupied 53% of the national budget.
Until now, each retiree in the public sector, that is, the unproductive sector got more money than what 20 retirees received in the private sector, also known as the productive sector.
Nosso sistema previdenciário coloca o Brasil em uma realidade muito dura. Tenho convicção que a posição de reformar o Estado brasileiro é a posição correta. https://t.co/lAbJikZjdz
— Rodrigo Maia (@RodrigoMaia) July 11, 2019
In other words, for years, the enormous state not only usurped money that the productive citizens were contributing at that time, but it also controlled its future to support bureaucrats.
After the approval of the pension reform in the National Congress, the Economic Minister, Paulo Guedes, warned that it would be a move to accelerate privatizations.
The Minister of Economy has the same academic background that pulled Chile out of socialism and made it the most prosperous country in the region: the Chicago School, “a temple of global liberalism,” according to Estadao newspaper.
The study considers privatization, disinvestment, the opening up of capital, and the sale of minority interests of state-owned enterprises and their subsidiaries.
“We have to accelerate privatization to invest money in the social area,” Guedes exclaimed.
The minister proposes to reduce state intervention in the economy as much as possible. He believes that state-owned enterprises, many of them incurring losses, consume money that should be spent on education, health, and safety.
There are 132 direct or indirect shareholdings with market or block bargaining potential, including the postal service.
According to the news platform, the reforms include proposed minimum amounts to grant the onerous allocation of pre-salt areas (part of the offshore oil platform) and two rounds of oil and natural gas bids, expected by the end of this year.
Brazil financed dictatorships in Cuba and Venezuela
The study also highlighted BNDES’s holdings, through BNDESPar, its investment arm, in open and closed capital companies, whose total discounted market value is 143.7 billion Brazilian real, or 382,629,990 USD.
It is worth mentioning that it was through the BNDES that, under governments linked to the Sao Paulo Forum and as such to 21st-century socialism, Brazilian citizens’ taxes helped to finance Nicolas Maduro’s regime in Venezuela as well as the dictatorship in Cuba.
??"Venezolanos mueren de hambre por la tiranía de un gobierno que anda de la mano con la dictadura cubana. Via BNDES y otras fuentes de su dinero Brasil es un gran patrocinador del socialismo que masacra millones en el mundo. ¡Eso cambiará! ¡Con nosotros, el foco es Brasil!" https://t.co/xwuNIgzo20
— Rumbo Libertad (@Rumbo_Libertad) September 30, 2018
Cuba currently owes more than 17.4 million USD to Brazil. Cuba’s debt expired in August 2018, and Brazilian citizens’ taxes had to finance it, as Brazil acted not only as a lender but also as a guarantor. So, to safeguard its reputation and ability to pay, Brazil assumed payment of the debt. However, this threatens to come to an end under the administration of President Jair Bolsonaro, who accuses the “Cuban dictatorship” of being co-responsible for the hunger suffered by millions of Venezuelans, which is why he resists being a “sponsor of socialism.
“Cuba has received billions of reals of Brazilian taxpayers’ money in the name of the Sao Paulo Forum at the expense of Brazilian citizens,” Bolsonaro declared. If the Bolsonaro administration’s proposal is implemented, Brazil will produce 300% more money than in the last 25 years.
According to a BNDES study, between 1990 and 2015, Brazil generated 54.5 billion USD with 99 privatization processes. The Temer government generated approximately 2 billion USD through 124 projects, of which 7,455,560,000 USD was through oil. The total is about 66.5 billion USD, which is a third of what the current administration would produce in the most pessimistic scenario.
If they manage to collect half of what the surveys by Estadao, Credit Suisse and Bradesco show (62,573,450,000 USD), it would mean that the Bolsonaro government would carry out the most extensive privatization program in Brazil’s history.
Besides reducing the size of the state, the privatization program aims at reducing the public debt, which currently accounts for 79 % of GDP, which in turn would allow a sustainable fall in interest rates, which are the second-largest government expenditure.
In 2018 alone, the Welfare Index calculated that Brazil spent 93,194,500,000 USD on public debt.
If the political and economic trend continues as it is, without financing other countries’ dictatorships and lowering spending on bureaucracy, Brazil could achieve its most fruitful stage and with sufficient resources to plan for the future, which now has a fairer retirement system.