Brazil faces one of the most challenging moments in its history. After consecutive years of low growth, the Covid-19 pandemic contributed to pushing the country into an unprecedented crisis. Rising levels of poverty, strong unemployment, the state’s fiscal crisis and sky-rocketing inflation, all in a toxic and polarized political context.
At the international level, the moment is also one of turmoil. The rise in interest rates in the United States and Europe, added to the reduction in economic stimulus measures to contain inflation, should have significant impacts on the dynamics of global growth, with direct consequences for our economy. Added to this is the tension in trade disputes between the main global economies, as well as the war between Russia and Ukraine, which work as a constant source of instability.
In this gloomy and disheartening scenario, January 1, 2023 will be the beginning of a new presidential term. I dare here to present a list of five priority actions that, in my humble understanding, should be pursued from the first day of the next government. But before that, it seems essential to me to make a small observation: it is essential that not only our governments, but especially Brazilian society, become aware that there are no easy, quick solutions and without the assumption of some dose of sacrifice.
It is essential that whoever comes to occupy the chair of President of the Republic of Brazil assumes their role of leadership and coordination in the face of so many problems that need to be faced.
It is important to recognize that the ills that affect our country are, for the most part, structural, deep and complex. Because of this, any solution to be given will depend on the conjunction of forces from the most varied segments of society. Without this awareness, any solution tends to be punctual, limited, with short reach and low effectiveness.
Thus, the first priority of the next government must be to fight hunger and misery in the country. In recent years, whether due to the economic crisis, the pandemic or due to the lack of more structured policies to combat poverty, we have observed a significant deterioration in the living conditions of the most economically vulnerable sections of the population. Currently, more than 30 million Brazilians are starving and need immediate action to get out of this situation. The emergency expansion of assistance programs, for example, must also be accompanied by training policies, income generation, employment and opportunities, as well as the permanence of children and young people in school. Fighting hunger and poverty is a requirement for development, not the other way around.
The second priority is to increase investment in education, with a focus on science, research and innovation. The world is going through a period of intense technological transformation which, associated with migration to low-carbon economies, tends to increase the distance between developed (more technological) and undeveloped (less technological) countries. However, despite this dynamic, opportunities also arise, even for countries with less technological maturity, which can be explored if they manage to act strategically in this context, which has in science and in the production of knowledge central elements.
Therefore, the chances of obtaining some convergence in relation to the nations that are ahead in this process pass through education, at its different levels, from basic education to graduate studies. Furthermore, education is also the gateway to citizenship, opportunities and development and, as such, must be unconditionally prioritized by any government.
The third priority is to improve the business environment in the country. For that, two distinct fronts of action would be necessary. In the first one, promote actions that relieve and facilitate the operations of the private sector, especially micro, small and medium-sized companies. In addition, the Brazilian tax system is very regressive, due to the prevalence of indirect taxes (which are levied on products and services) in relation to direct taxes (which are levied on income and assets), which is another point that needs to be reformed.
The resumption of investment in infrastructure should also be a priority. Brazil has long suffered from a precarious and deteriorated infrastructure, which compromises national competitiveness. The resumption of investments in this area would move important sectors of our economy and would significantly contribute to improving the lives of entrepreneurs.
Last but not least, the fifth priority is to tackle the problem of our domestic public debt. The combination of low growth, high interest rates and higher public spending caused a significant increase in government debt, which currently stands at more than 80% of GDP. As the prospects for economic expansion are not encouraging and the costs of servicing this debt follow the trend of rising interest rates, what is foreseen for the next government is an extremely complicated fiscal scenario, which tends to make any of the priorities listed unfeasible. This needs to be clearly discussed with society, since possible solutions to the situation usually involve the reduction of public services, with direct impacts on the lives of citizens, and/or the increase in taxes.
In any case, regardless of the priorities to be established, it is essential that whoever occupies the chair of the President of the Republic of Brazil assumes their role of leadership and coordination in the face of so many problems that need to be faced. This is what is expected of the leader of a nation and this is what can help us get through this moment.
Julio Grudzien Netoeconomist, has a PhD in Public Policy and is a professor of Economics at FAE Centro Universitário.