Agência Brasil
Brasília – Brazilian finance minister Antonio Palocci said yesterday that the Brazilian economy is heading for sustained growth. In an interview to news program Bom dia Brasil, the minister mentioned the rates obtained in the second half of 2003.
“In 2003, we had a first half with great economic retraction, but a second half of growth. If we look at the figures for the last quarter, we will see that the growth was 1.5% with regard to the third quarter. This rate would show growth of 6%,” he stated. The accumulated result for the year showed a retraction of 0.2% in the Gross Domestic Product (GDP).
Although last year was a bad year for the economy as a whole, Palocci pointed out that in 2003 some sectors grew. “Water under the bridge has gone. What is most important is that Brazil is now entering a long period of economic growth, with job generation, incentives to the sectors that hire most, with added export and agriculture value,” he stressed.
The finance minister also stated that the areas that have not shown recovery deserve a different government strategy. “Some sectors have taken the lead, others will come later,” he stated. As he explained, the federal government is paying special attention to sectors with structural difficulties, such as civil construction.
Primary surplus
Palocci also stated that the way Brazil economised funds to reach its primary surplus (revenues minus expenses not counting interest) is not adequate, and the country will therefore have to look for an alternative “more correct” method to honour its agreements.
In 2005 the country should work on a new primary surplus concept. “What we are going to do next year is neither reduce nor increase the surplus, we are going to introduce the idea of variable surplus, oscillating according to the economy. When Brazil grows more, more funds are put away. If in one year the country goes through economic difficulty, the government does not charge more taxes from its people, but spends part of what it has stored away, normalizing the situation. This is a more adequate manner of working a surplus,” he stated.
The finance minister stressed the importance of maintaining the primary surplus. According to him, this is the best way to balance debts, reducing them in time, and make more funds for investment available. “What Brazil has been doing in recent decades with regard to the primary surplus or deficit is not adequate. Normally the country economises during the crisis and spends more in moments when there is growth and revenues are good. The opposite should happen,” he explained.
Palocci compared the country economy with a family budget and added that the best idea is to save when you have greater funds for investment. “If at a specific moment you are earning more, you should stash some money away, then, if you have great difficulty, you will have those reserves to spend. What Brazil does is the opposite, when the country is doing fine, it spends a lot, when it is doing badly it saves more, taxing the society and worsening the economic situation,” he stated.
