Unfortunately, either with the impeachment of Dilma Rousseff or not, Brazil's future is threatened because neither Dilma Rousseff nor Michel Temer will be able to avoid the collapse of the economic system and the political and institutional system of Brazil. Avoid the collapse of the economic system and the political and institutional system in Brazil would be the preconditions for the retaking of Brazil's development in the future that only a new government elected in 2018 with support of the population would be able to accomplish.
The future of brazil post impeachment of dilma rousseff
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THE FUTURE OF BRAZIL POST-IMPEACHMENT OF DILMA ROUSSEFF
Fernando Alcoforado *
Unfortunately, either with the impeachment of Dilma Rousseff or not, Brazil's future is
threatened because neither Dilma Rousseff nor Michel Temer will be able to avoid the
collapse of the economic system and the political and institutional system of Brazil.
This conclusion results from the fact that neither Dilma Rousseff nor Michel Temer
meet the ability to halt the collapse of the Brazilian economy because they will not have
political power to adopt measures to prevent the explosion of public debt in Brazil
because both are submissive to the national financial capital and international. If Dilma
Rousseff does not suffer the impeachment, she will not be able to avoid the political and
institutional collapse of Brazil and much less to rule because she won´t have the
parliamentary majority needed to approve the government projects in Brazilian
Congress. Although Michel Temer gather more capacity to govern than Dilma Rousseff
because of having parliamentary majority in Brazilian Congress required to the approval
of their projects, he does not have the support of the majority of the population. It can
be said that the task of halting the ongoing process of collapse of the economic system
and the political and institutional system in Brazil can only be fulfilled by an elected
government in 2018 made up of political forces effectively committed to the interests of
the vast majority of the population Brazilian and not submitted to national and
international financial capital.
Preliminary and urgent measures that the government elected in 2018 should adopt to
prevent the collapse of the Brazilian economy are as follows: 1) drastic reduction in the
cost of public spending by reducing the number of ministries to 10 or 15 and the
elimination or drastic reduction of commissioned positions; 2) audit of the public
internal and external debt of the country; 3) renegotiation of the payment of the interest
of foreign debt and public domestic debt of the country seeking stretching of the
payment period to increase the availability of public resources for investment; 4)
adoption of a fixed exchange rate to replace the floating exchange rate to protect the
domestic industry; 5) input flow and capital outflow control to prevent excessive
inflows and capital flight from the country; 6) sharp reduction in interest rates to
encourage investment in productive activities; 7) selective import of raw materials and
essential commodities from abroad to reduce expenditures in currency of the country; 8)
reintroduction of market reserve in areas considered strategic for national development;
9) adoption of a fiscal policy capable of ensuring the resources that the state would need
for investment and encumber the minimum population and productive sectors; and 10)
state reform and public administration to make it efficient and effective.
After the immediate measures, short-term, to halt the collapse of the Brazilian economy,
the future government of Brazil elected in 2018 should adopt measures to contribute to
the economic growth of the nation in the medium and long term. It is worth noting that
the Gross Domestic Product (GDP) is defined as the total value of production of wealth
in a country during one year by resident economic agents in the country. GDP can be
calculated in the currency of a particular country from the sum of all its components:
GDP = C + I + G + X - M In this formula, C is the expenditure of households and
companies in consumer goods (private consumption), I the expense of public and
private companies in investment, both in capital goods (gross fixed capital formation)
and in raw materials inventories and products (changes in inventories), G to government
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spending (federal, state and municipal government) in consumer goods (public
consumption), X the revenue from exports and M to import spending.
Based on this formula, GDP growth can be achieved with the expansion of private
consumption (C) increasing wages and consumption of companies and taking credit
policy that encourages the consumer to buy, increasing investment in productive
activity (I ) that may result from reducing the tax burden and the implementation of tax
incentives and attractive interest rates policy for entrepreneurs, and the rise in
government spending (G) with an emphasis on investments in economic and social
infrastructure that in Brazil, demand resources of R$ 2.5 trillion. The increase in export
revenue (X) and the reduction in spending on imports (M) with the adoption of import
substitution policy also contribute to the growth of the economy. The optimal strategy
for economic growth is one that is supported on maximizing investment (I) in
productive activities that contribute to the increase in income and employment and,
consequently, the household consumption (C) and to increase the tax revenue of the
government allowing consequently increasing government spending (G). Moreover, the
optimal strategy of economic growth should maximize the difference between revenue
from exports (X) and spending on imports (M).
Under current conditions in Brazil, the optimal strategy of economic growth would
require the maximization of investment (I) that would be made possible with: 1) the
reduction of the tax burden and the implementation of a policy of tax incentives and
attractive interest rates to entrepreneurs; 2) increasing public savings by reducing the
burden of payment of the public debt; and, 3) the attraction of foreign capital to invest
primarily in energy, transport and communications infrastructure. To combat the
inflation of demand that could result from the increase in household consumption (C)
and private investment (I), the government should encourage the expansion of
agricultural and industrial production in productive sectors where supply is insufficient.
In turn, to reduce interest rates in the financial system, the Brazilian government should
promote a drastic drop in the Selic rate (basic rate of the economy) that would
contribute also to the reduction of government expenditures for the payment of public
debt and should intervene in the financial system to lower the exorbitant interest rates
practiced by him.
For the Brazilian government maximize its spending (G), it is necessary to train enough
public savings. To increase public sector savings that is very low (1% of GDP), the
government needs reduce drastically the Selic rate which today corresponds to 14.25%,
renegotiate the payment of the internal debt service aimed at its stretching and make
current expenditures of the public debit are reduced or grow less than the Gross
Domestic Product (GDP) to have the resources to carry out public investments,
especially in poor economic infrastructure (energy, transport and communications) and
social (education, health, housing and sanitation). It should be noted that the
renegotiation of the terms of domestic and foreign debt is critical. Without the adoption
of this measure the Brazilian government will not be able to promote the country's
economic growth given that almost half of the government budget is allocated to the
payment of charges to the domestic public debt whose main beneficiary is the financial
system.
In turn, to reverse the ongoing collapse of the political and institutional system in
Brazil, the government elected in 2018 should adopt the following measures: 1)
Establishment of a government composed of competent people and of unblemished
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moral; and, 2) Constituent Assembly Exclusive Convocation that should promote the
reform of the State and Public Administration on a new basis, establish the
parliamentary system of government and create mechanisms to enable people: a) to
exercise direct democracy in very important decisions taken by federal, state and
municipal governments through plebiscite or referendum, and; b) to exercise control of
elected to the Executive and Legislative punishing those which may have betrayed the
interests of the electorate answering about their cassation or not. The Constituent
Assembly Exclusive should institutionalize the unicameral system and reducing the
number of parliamentarians and their stewardships in federal, state and local
parliaments.
Avoid the collapse of the economic system and the political and institutional system in
Brazil would be the preconditions for the retaking of Brazil's development in the future
that only a new government elected in 2018 with support of the population would be
able to accomplish.
* Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011),
Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012) and
Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV,
Curitiba, 2015).