Monthly Statement – Mar/19

Dear Friends,


We really need to fix the roof while the sun is shining. From this standpoint, we lost the timing for the adjustment of our public finances a while ago. In recent years, dark clouds have loomed on the horizon, and today the weather has stormed on us. With the recent, legitimate and at the same time overpowering decision of our legislators (including some PSL supporters), there is very little room for maneuver in budget management.

We should not lose sight of the impacts the economy is bound to suffer, when we evaluate the extent and the eventual outcome of the Social Security Reform on the eve of its appreciation/voting. We cannot get lost in narratives and then feel helpless in the face of imminent “death.” While optimistic about a yet-to-come substantial approval of the Pension Reform, it is undeniable that the likelihood of either its failure or dehydration has increased significantly. The analysis is objective and clear. We have destroyed our country’s finances in the last decade, and if Minister Guedes’s plan fails to move forward, he and probably a good part of his team will leave the government.

This fact alone would be a disaster, but even if the team is reassembled, resources will still fall short of the necessary amount to properly manage Brazil. The government will have to submit itself once again to Congress to obtain additional credits (as it already attempts to do through PL 4/2019) to cover the essential expenses. If Congress does not approve the Reform, it will hardly make any sign toward extending further credit lines. The end result: either the government will default on the Golden Rule (impeachment), or will not provide fundamental services (low popularity and following consequences). The immediate interpretation will be that the Right-wing administration was incompetent and destroyed the country, and we will have the Left back on its feet. Is it sheer skepticism in the likes of Hemingway? No way! Against facts there are no arguments, and so we should reflect on this our walk. It is easy to understand “for whom the bell tolls”: they do it for us!


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