Choice of investments, increased spending and political misuse are some of the reasons for the record deficit of federal state-owned companies in the third visit of Luiz Inácio Lula da Silva (PT) at the Palácio do Planalto, according to experts interviewed by CNN Money.
— excluding Petrobras and public banks —, show data from the BC (Central Bank). This is the largest deficit recorded for the period in the entire historical series.
The request for help from Correios last week gave new impetus to the debate about how state-owned companies are being managed, and how this scenario could threaten public accounts.
For economist Elena Landau, who served as former director of privatizations at BNDES (National Bank for Economic and Social Development)the results have a deeper root, which escapes the macroeconomic panorama.
The greatest impact would arise from a “philosophy” that the state-owned company is a political instrument, and not a company, due to the number of positions commissioned by internal appointments.
“The Post Office is an impressive case. A case study, such was the disaster that occurred”, says the economist. “These are the administration’s choices, to spend on advertising, to spend on personnel, to spend on projects that do not concern them.”
Landau dismisses external issues. The opinion, however, is not unanimous.
For the chief economist at Lev Asset Management, Jason Vieira, there are structural factors that contribute to the sudden drop in the accounts of public companies, such as the increase in spending driven by inflation and input and energy costs.
Additionally, there is the call “regulatory inertia” of some state-owned companies, such as Correios, which constantly need government subsidies.
“These are companies that often have low competitiveness and depend on non-recurring revenue. When we talk now about the non-structural, more cyclical issue, we can say that there is a great political management in its state-owned companies, which has a series of unqualified appointments, especially in terms of the board”, he adds.
What could explain a worsening in state-owned companies in 3rd Lula government?
- Weaker financial results (such as Correios and Caixa Econômica)
- Greater internal political polarization, which can also make company management difficult
- Criticism regarding the appointment of political allies to management positions
- Fiscal pressures with the change in the fiscal anchor, from the Ceiling to the Framework
- Less favorable global economic situation (International conflicts such as in Ukraine and the Middle East affect energy and food prices)
Like Landau, Vieira argues that state-owned companies are lacking people with technical capacity for the sector, and are used as instruments for political support.
With this, there is also what is classified as aggressive investments with long-term returnssuch as in the areas of advertising, or the general investment of the Lula government in the PAC (Acceleration and Growth Program) — which end up draining companies’ already deficient cash flow.
“There is obviously a need to look for what works in these companies in terms of performance,” he says. “Many of these companies have high costs, tight margins, and often need to resort to loans. The Treasury is not able to cover many of the times”, he states.
Vieira adds that some state-owned companies operate with high costs and tight margins, often resorting to loans, as is the case with Correios. This would stop the structural problem of financing, governance and business model, which is progressively worsening in the experts’ perception.
Post offices are not an isolated case
Correios’ losses are not an isolated case as they expose a structural difficulty for some state-owned companies in adapting to the new digital economy and AI, says Alexandre Espirito Santo, Chief Economist at Way Investimentos.
The expert adds the existence of pgovernance, investment and management problems for other public companies.
“There are relevant macroeconomic factors, but administrative decisions also have great weight”, says Alexandre.
According to data from MGI (Ministry of Management and Innovation) compiled by CNN Money, were, in addition to the Post Office, the CBTU (Brazilian Urban Train Company), a Embrapaa Infraero ea Brazilian Hospital Services Company.
Vieira, from Lev Asset, also draws attention to recent negative results from Banco do Brasil, a mixed capital company. Among the reasons, according to him, are the high interest, with Selic currently in 15% per yearin addition to defaults in the agricultural sector.
compared to the previous year, reducing the percentage to be distributed among shareholders by 30%, called payout.
Way’s chief economist, however, explains that Lula’s first administrations in the early 2000s contained different results. State-owned companies showed robust growth, investments and financial results, often driven by the commodities boom, in addition to the legacy of fiscal surplus left by Fernando Henrique Cardoso.
