Brazilians have barely come to terms with the resignation of Sergio Moro from the Justice Minister before rumors of another imminent cabinet exit started: Economic Minister Paulo Guedes, Jair Bolsonaro’s other “superminister.” Mr. Guedes is reportedly fuming over the government’s recently-presented Pro-Brazil Plan, dubbed by the local press as “the Brazilian answer to the Marshall Plan.”
The Pro-Brazil Plan is based on restoring economic growth through significantly increasing public investment through various infrastructure projects —the exact opposite of Mr. Guedes’s liberal brand of economics and it reportedly does not even include a timetable or even accurate amounts. The plan infuriated Mr. Guedes, who is against elevating the public deficit by carrying out such projects — and he boycotted its launch.
According to Brasília insider Fernando Rodrigues, Mr. Guedes told his fellow members the plan is a throwback to the Workers’ Party developmentalist days: “This is like Dilma [Rousseff’s] Growth Acceleration Program. Brazil has sunk because of this kind of project left unfinished. So we’re getting out of the hole by digging deeper?”
However, this harkens back on closer inspection to the type of largesse that was the mainstay of economic policy during Brazil’s military dictatorship and previously supported by Mr. Bolsonaro, before his short-lived conversion to liberal economics under the influence of Mr. Guedes.
Brazil’s first economic strategy to counter the economic impacts of Covid-19 was a relatively orthodox one. Many of the measures initially announced by the Economy Ministry and the Central Bank — such as postponing taxes, providing credit liquidity, guaranteeing working capital for entrepreneurs, and making labor contracts more flexible — were a clear bet in the private sector’s ability to recover and sustain the country’s economy....
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