Brazil must push ahead with reforms, including a proposed cap on government spending and an overhaul of social security rules, to restore long-term order to public finances in Latin America's biggest economy, according to the country's finance minister.
Finance Minister Henrique Meirelles, in an interview published by the Folha de S. Paulo newspaper on Sunday, said he was confident that Brazil's Senate would soon follow the lower house of Congress in approving the proposed ceiling.
The measure, meant to rebalance public finances after years of heavy spending that led to a government deficit equal to about 10% of GDP, is the first of several that President Michel Temer hopes will promote investment and help restore confidence and return Brazil to growth after two years of recession.
Meirelles, who assumed the Finance Ministry earlier this year when Temer took over for impeached former President Dilma Rousseff, told Folha that additional measures, especially a reform of Brazil's costly social security program, will be necessary to help the spending cap make any difference.
Without changes to existing retirement laws, he said, Brazil would have to increase already onerous tax levels to keep financing social security payments. It would mean a tax increase because the bill would have to paid, Meirelles said.
The minister, who previously served as central bank president during the administration of former President Lula da Silva, declined to say whether he would be a candidate in 2018 presidential elections.
I am a candidate to do a good job at the Finance Ministry and to make the economy grow, he said.
Meirelles, echoing sentiments already expressed by many economists, said he expects Brazil to finally resume growth next year but that the severity of continuing economic problems means that any rebound will be slow.
There is no doubt that the resumption of growth will be a slower process than in previous crises, he told Folha.
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It's reached the point of either 'make it' or 'break it'....without the overhaul of the social security system, the day that there won't be enough money to pay for pensions, is not far off.Nov 01st, 2016 - 04:55 pm 0
How much you want to bet this overhaul means the working guy loses big time?Nov 02nd, 2016 - 01:28 am 0
How much you want to bet that the politicians who pillaged Brazil's finances and lead to this dire need to overhaul the social security system, won't have to sacrifice one dime of their security system?
How much you want to bet this “overhaul” means the working guy loses big time?Nov 02nd, 2016 - 08:03 pm 0
Don't agree, and will tell you why : currently the social security system is totally unfair, in that public servants retire on full pay while those in the private sector have a cap on what they can expect to receive ; all contributions, from both categories, go in to a common coffer, and are meant to be distributed - when the time comes - according to age and time of contribution, and that's where the problem starts. Stats of 10 yrs ago, while obviously not 100% accurate nowadays, still confirm the current trend ; The total work force (officially registered and paying their dues), was around 60 million - 50 million in the private sector and 10 million in the public sector, but the workers in the private sector received 40% of the cake, while the workers in the public sector, although only representing 20% of the work force, took home 60% of the cake. As such, the public sector is responsible for about 80% of the yearly deficit in the system (usd 40 billion in 2015), which means they're being subsidized by the private sector, a problem that needs addressing. Previously, people didn't live as long as they do today, so the system does not foresee paying pensions for 20 years, on average, after retirement ; Another problem, with Brazil's successive crises, and increasing unemployment, more people get drawn into the informal market and despite no longer contributing, still maintain certain rights. Then you get the frauds, draining the system - they've just discovered that 80% of pensions paid for incapacitation, are fraudulent. Not to mention the tens of thousands of dead people still getting paid ; Under the present system, the only certainty is that the money will run out soon and no-one will get a cent.
As to politicians, must agree - they'll always legislate in their own benefit and will do whatever it takes to ensure they lose nothing. It's up to us to stop them.