Guedes hints at plan to help Brazilians in debt

Guedes plan debt
Economy Minister Paulo Guedes. Photo: Antônio Cruz/ABr

Speaking at the CEO Conference, an event organized by investment bank BTG Pactual, Economy Ministry Paulo Guedes hinted at proposals the Brazilian government is considering to foster economic activity. Among them is a plan to allow workers to access resources from mandatory severance fund FGTS to help pay off their debts.

Money from the FGTS is usually only made available when someone is laid off or purchases real estate. Back in 2019 and 2020, the government already used the fund to inject more cash into the economy. 

Mr. Guedes usually omits details when making such statements, and this time was no different. He didn’t say how much each worker would be able to withdraw, which makes it impossible to assess the efficacy of the move. There are currently 62.5 million Brazilians in default, which the United Nations Development Program calls a “scenario of super-indebtedness.”

Mr. Guedes also talked about slashing manufactured goods tax as a way to “re-industrialize the country.” This kind of move, however, is usually met with skepticism by markets, as it has failed to stimulate the sector to a higher level of global competitiveness — while placing a massive burden on the public purse.