Brazil Economy Minister hit by loss of two top deputies

RIO DE JANEIRO (AFP) – Brazilian Economy Minister Paulo Guedes said two of his top deputies resigned in a “stampede”, news that could rattle market confidence in his reform agenda for Latin America’s biggest economy.

Guedes, the powerful free-market guru to far-right President Jair Bolsonaro, is battling to steer Brazil back toward his agenda of austerity and privatisations – no easy task during a pandemic that has hammered the country and forced the government into months of
emergency spending.

Guedes has now lost eight top aides since Bolsonaro took office in January 2019, nearly half his original team.

He acknowledged in a news conference that the latest – Salim Mattar and Paulo Uebel, his point men on privatising state companies and administrative reform, respectively – resigned in frustration at the slow pace of both.

“It was a stampede,” Guedes said. He vowed to get his reform agenda back on track, starting by fighting political pressure to lift the cap on federal spending.

Speaking alongside the Speaker of the Lower House of Congress, Rodrigo Maia, Guedes said they agreed that it was time to rein government spending back in, after pandemic emergency measures such as monthly stimulus checks of USD110 to help workers hit hard by stay-at-home measures.

“If the pandemic dies down by the end of the year, as we’re all hoping, why would we extend (emergency spending) into next year?” he said.

“On the contrary… our reaction to this stampede today is that we have to speed up reforms.”

Bolsonaro took office vowing to privatise a raft of state companies, but hardly any have been sold so far.

Meanwhile, despite the debt hawks’ efforts, Brazil’s national debt ballooned from 75.8 per cent of Gross Domestic Product in December to a record 85.5 per cent of GDP in June, and is forecast to hit nearly 100 per cent by the end of the year.

Speculation has swirled recently that Guedes could be sacked, though Bolsonaro has publicly stood by him so far.

Brazil has more infections and deaths in the pandemic than any country except the United States: more than 3.1 million and 103,000, respectively.

Economists polled by the central bank expect the economy to contract by a painful 5.62 per cent this year.