Scary, worrying and dangerous

Image: Linjie Zhang


Messing with constitutional minimums and the association of social security benefits with the Minimum Wage is almost criminal


On May 2nd, the Thursday after the holiday, the finance minister Fernando Haddad posted on X the recommendation to read a text by economist Braulio Borges, “The change of goals and the challenge of Brazilian fiscal sustainability”, saying that the text was “about the recent dynamics of public accounts”.

As this is a recommendation from the Minister of Finance for reading on one of the most important subjects for economic policy, the impulse is to read.

First who is Braulio Borges, the author of the text. He is an economist with a degree and a master's degree from FEA-USP. Although Fernando Haddad presents him as an “economist at FGV”, in reality he is a senior economist at the consultancy LCA and an associate researcher at FGV-IBRE, as he appears on LinkedIn. His main occupation for over 20 years has been at LCA. At FGV-IBRE for almost nine years. LCA is one of the largest economic consultancies in the country and was founded in 1995 by Luciano Coutinho, Luiz Gonzaga Belluzzo, Bernard Appy and two other partners.


The text opens by saying what it came from: “The delivery of PLDO 2025 to Congress was accompanied by a downward revision of the central government's fiscal targets for 2025 and 2026, considerably reducing the fiscal consolidation to be sought by the end of the current mandate compared to to the goals announced just over a year ago.” In other words, the fiscal targets proposed by the government will not be met. For him, the market never believed the government's promises on this topic. It is a text written by an economist for economists. Below are some questions raised.

(i) The debate on public accounts is not being carried out properly; (ii) it is important to seek an increase in the tax burden; (iii) personnel expenses have been stable for some time and an administrative reform would generate very small tax savings; (iv) the review of public spending should not only be to improve the quality of spending, but also to generate fiscal savings.

(v) The big villain is the General Social Security Regime (RGPS). Excluding the RGPS, the Union has had a surplus since 1997, except in three years: 2015, 2016 and 2020; (vi) it is crucial to stop the expansion of spending on the General Social Security Regime, decoupling all benefits, retirements and pensions, including the BPC, from the minimum wage; (vii) the minimum age and minimum contribution time should vary automatically with data on survival and the school-age population calculated by IBGE; (viii) relieve companies’ payroll; (ix) spending on health and education is no longer linked to revenue and is linked to per capita expenditure.

His position is very direct: control of the debt/GDP ratio, fiscal surpluses and everything that comes as a consequence of this. An economist with typical positions on the financial market and the preservation of the interests of the financial bourgeoisie.

He is where he has always been, defending what he has always defended and will possibly defend. He must be good at what he does, as he has been providing economic consultancy for the market for over twenty years. The problem is that Fernando Haddad recommends reading this text. A text that is straight to the point: the fiscal policy proposed by the government is not sustainable nor will it achieve its objectives if the measures it proposes are not implemented. It is not an economic theory text exposed to debate. It is a text from a consultant evaluating the government's fiscal policy based on data analyzed through his lens and with very clear and precise proposals of what needs to be done to make this policy work.


We usually recommend reading a text about economics when it brings important elements to the debate or when it brings proposals that we agree with. As a rule, that's it. No one recommends a text of this nature based on the author's literary qualities. As this is not a text for debate, agreement with the proposal remains. And that is scary, worrying and dangerous.

The Minister of Finance does not indicate a text in exchange for anything or for anything. Even more so, a minister who reads a lot, according to criticism from Lula, his boss. Fernando Haddad agrees with the content of the text and the proposals that the author presents. He believes in the fiscal policy he proposed and especially in the theoretical bases of this proposal. Specifically in the curse of maintaining the debt/GDP ratio at such or such a level that no one knows what it is or why it is. In the USA it can be 120%, in Japan and Italy 200% and in Brazil 80% puts us on the brink.

The author of the text in an interview speaks that the ideal for Brazil is to be at 60%. Why? In this interview, published on May 5, he says: “If we want to return to investment grade, our public debt needs to fall to at least 60% of GDP.” The publication does not say what day the interview took place, but a risk agency changed the perspective of the interview. rating of Brazil to positive. Who is wrong, him or the agency?

To make matters worse, as in a rehearsed dance, immediately after Fernando Haddad indicated the text, the planning minister said the same thing. Coincidence? Given the alignment between the two, I don't believe it.

Fernando Haddad's team is spinning a web that does not seem to be good for the working class and the people, especially for those who voted for Lula, believing in a different world from the one we live in in the Temer-Bolsonaro cycle.

Tampering with constitutional minimums and the association of social security benefits with the Minimum Wage is almost criminal. Throwing this information out as just a test balloon is cruel. Whatever this may have been, the government is deepening its option for the wrong side, for the side of financial capital and the bourgeoisie that has already overthrown Dilma, arrested Lula and attempted a coup on January 8 of this year.

We will face this debate with all the strength we can muster. For the good of the working class and our people.

*Luis Sergio Canario is a master's student in political economy at UFABC.

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