We’re covering today the continuous struggle of Economy Minister Paulo Guedes over public spending in Brazil; growing optimism about the progress of the pandemic; and another slaughterhouse banned from exports due to coronavirus scares.
Drawing a line in the sand
After a dreadful Monday, markets bounced back on Tuesday after Economy Minister Paulo Guedes reaffirmed that he and President Jair Bolsonaro are on the same page. While Mr. Guedes got public endorsement for his austerity agenda, he also had to yield a bit: the federal budget has fiscal space of BRL 31 billion (despite the crisis), and Mr. Guedes agreed to allocate BRL 5 billion to infrastructure projects to be executed this year. And no more.
Why it matters. The extreme reactions to rumors of a ‘Guedes-exit’ have shown that Mr. Bolsonaro would be able to change his Economy Minister — but not without a major image crisis with investors.
Continuing tension. But the tug of war continues between pro-austerity economists within the administration and some of the president’s advisers who want the government to spend big bucks on infrastructure and social programs. The biggest sticking point of all is the government’s BRL 600 emergency coronavirus salary.
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