The pre-candidate for president of the Republic and former governor of Minas Gerais Romeu Zema (Novo-MG) stated that, if elected, he will privatize all state companies that are still under the control of the Union. According to him, the measure will help to reduce the interest rate in Brazil “more quickly”.
“If elected, I will privatize everything. This will cause a very rapid drop in interest rates because it will come together with an administrative reform, a pension reform, a review of social benefits”, he stated in an interview with the program Free Channel.
Today, the Union still maintains control of state-owned companies in areas such as energy, banks, logistics, technology and services, including Petrobras, Banco do Brasil, Caixa Econômica Federal, BNDES, Correios, Serpro, Dataprev, Telebras, Casa da Moeda, Embrapa and companies linked to the nuclear sector, such as ENBPar and Eletronuclear. Zema did not detail which of them he was referring to.
In Zema’s argument, privatizations could contribute to lower interest rates because they would improve the perception of fiscal risk. The effect, however, is not automatic or necessarily quick: privatizations usually take time as they depend on modeling and, often, on Congressional approval and legal disputes.
Zema stated that privatization would be accompanied by administrative reform, pension reform and review of social benefits, but he also did not detail which rules would be changed, which careers would be affected, nor which programs or expenses would be included in the review.
Pension reform
In the interview Romeu Zema (Novo) stated that, if elected, he will work for a pension reform in Brazil so that citizens’ contribution time increases at the same time that no real adjustments are made to beneficiaries’ salaries.
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For the former governor of Minas Gerais, the current format of the system is still “unsustainable”.
“We will need to increase the contribution time, this is fundamental. But we cannot provide real gains, in any way. Real gains for those who are retired is something that Brazil does not support”, he stated.
The increase in contribution time is defended by Zema as a way of reducing pressure on public accounts, as it allows workers to remain active longer before retiring. In practice, this reduces the period in which the beneficiary receives pension and extends the time for social security collection, helping to maintain the financial balance of the system.
The criticism of real adjustments (increases above inflation) is related to the permanent impact on public spending. As pensions and social security benefits represent one of the Union’s largest expenses, any real gain incorporated into payments continually increases mandatory expenses, putting pressure on the federal budget and making it difficult to meet fiscal targets.
