Financial markets jumped on the Jair Bolsonaro bandwagon for one reason: Paulo Guedes, the ultra-libertarian economist the President-elect chose as his future economic tsar. As reporter Maria Martha Bruno pointed out on August 10, Brazilian big business had its eye on Mr. Guedes’ plan to cut public spending and push for deep structural reforms—particularly a reorganization of the country’s pension system. During the campaign, Mr. Bolsonaro also defended the reforms, however, just weeks before taking office, his stance seems to be veering from Mr. Guedes’ pro-market beliefs. In the space of a week, members of the future administration have given multiple signs that the pension reform —deemed as arguably Brazil’s most urgent problem—will take a backseat in the future administration’s agenda.
Last week, Eduardo Bolsonaro (one of the president-elect’s sons and close confidants) told investors in Washington that “it will be a fight, maybe [the government] can’t do that.” (listen to the audio clip below, in English).
Then, the future Chief of Staff, Onyz Lorenzoni, said that “there will be four years to pass a pension reform.” Finally, on Tuesday, the President-elect himself said that, instead of a single, comprehensive reform bill, it would be better to split it up into several proposals. Coupled with his previous statements that “the reform couldn’t be one that would kill old folks,” and you have plenty of red flags being raised for financial markets.