Good morning! We’re covering the government’s economic agenda for 2020. A move to make flying in Brazil cheaper. And a new rule to curb impunity? (This newsletter is for platinum subscribers only. Become one now!)
The economic agenda in post-pension reform Brazil
With the pension reform out of the way, Economy Minister Paulo Guedes is set to present Congress with a bold set of reforms, aimed at creating a new institutional framework for the country’s budget at all levels of public administration. His agenda has five axes:
- Administrative reform. Mr. Guedes wants to reduce the number of civil servants, cutting their salaries and reducing their job stability. Per the World Bank, public-service employees earn on average 96 percent more than people in the private sector, and (almost) cannot be fired (which the government sees as a deterrent to productivity).
- Cutting mandatory expenses. By 2020, 94 percent of the federal budget will be eaten up by “mandatory expenses” (salaries, pensions, and benefits). This reduces the government’s ability to invest.
- “Base zero” budget. For core sectors such as healthcare and education, the government is unable to lower budgets—limiting the government’s choices in how the money is allocated. Mr. Guedes...