Brazil’s Economy Minister Paulo Guedes has no intention of resigning according to reports in the Sao Paulo media, in an attempt to quash rising speculation that political pressure for more public spending could force him to quit.
Doubts about Guedes’ future have grown since three more of his special secretaries left the ministry and local media reported at the weekend that central bank president Roberto Campos Neto is being lined up to replace him.
However apparently Guedes and Campos Neto have agreed on the need to control spending so that Brazil can start to reduce its debt burden following a surge in emergency spending to combat the coronavirus pandemic. Speculation surrounding Guedes dominated currency market trading on Monday, driving volatility higher and the real lower, analysts said.
But Guedes is still involved in trying to reduce mandatory expenses and put in place controls against the creation of new expenses, as recently voted in Congress..
There has always been this conflict between the areas that want a budget to spend and those that need to control it. In the past, the fight was between Planning and Finance (ministries). The focus here is on one point: Economy, according to economic reports in the Sao Paulo media.
“And the peripheral ministries are there, at the edge of the lake, which is a little dry, wanting to take a drink of water”.
Guedes is expected to present his draft annual budget later this month, laying bare a dire outlook for public finances next year, and making it clear there will be very little room to make investments or increase expenditure.