Ex-IMF director: ‘Public sector is the only trustworthy agent’

Former IMF economist Otaviano Canuto. Photo: Divulgação

For Brazilian economist Otaviano Canuto, a former International Monetary Fund (IMF) official and the current director of the Center for Macroeconomics and Development, the public sector is more trusted in times of crisis. Because of this, Mr. Canuto told newspaper O Globo that the government should not see avoiding the public debt as its main goal, as the country could reach a more extreme scenario “in which Brazilians might starve to death.”

Mr. Canuto also noted that political instability further jeopardizes the economy amid the Covid-19 crisis. “It is not necessary to be an expert to see that the current scenario reduces the chances of flattening the curve and reducing the impact of the recession to come,” the economist said. With changes in the ministries and controversial statements by cabinet members and the president himself, investors could argue that the “risk is too high and the return too little.”

Earlier this week, another IMF official had already expressed concern about the situation in Brazil. The Fund’s former chief economist, Maurice Obstfeld, argued that President Jair Bolsonaro’s “disdainful response” to the Covid-19 pandemic could prove to be extremely costly both in terms of lives and the economy for the country.