Paulo Rabello: "Working in Brazil is a last resort option"
The interview with the president of IBGE (Brazilian Institute of Geography and Statistics) is a manifesto against rent-seeking in Brazil; after saying that Brazil's problem is the 'coach' – "look at the Brazilian national team, a reshuffling in the coach's mind made a different team emerge with the same players" – economist Paulo Rabello de Castro compares the thesis of some theorists that "we have to practice the highest interest rate in the world, because that is the universal remedy" with "treatment in a voodoo clinic"; "This sustains financial rent-seeking and makes it necessary for society to be re-educated for the commitment to work. Work in Brazil is a last resort option. The priority lines are those of subsidies and privilege," he says.
247 - The president of the Brazilian Institute of Geography and Statistics (IBGE), Paulo Rabello de Castro, gave an interview this Monday, the 5th, to Folha de S. Paulo in which he harshly criticizes the country's economic situation.
"We are still regressing. And, if we look ahead, we see less favorable projections than six months ago. As the months of 2016 progressed, it became clear that reversing the recession will be slower and more painful, from the point of view of what interests us most, which is job recovery. Therefore, the outlook is not good," he stated.
According to him, the country's monetary policy is one of the main reasons for the current economic recession. "The interest rate is a very serious remedy that should be used intensively and for a very short period. Not for decades on end. The result is that, from 1999 to today, the public debt is almost twice as high as it could be if we were practicing a neutral interest rate. This sustains financial rent-seeking and means that society needs to be re-educated about the commitment to work. Work in Brazil is a last resort. The priority lines are those for subsidies and privileges," stated Rabello.
Paulo Rabello also points out that the current economic situation is similar to that experienced in the 1980s, which became known as the "lost decade." "In the 1980s, we didn't just have international problems. Today the wind isn't as favorable, but that doesn't mean the scenario is completely different. In 1980 it was. We were mired in absolute restriction, we didn't have dollars and we had to import oil. Today we are in a crisis of credibility due to our imbalances," he stated.
The president of IBGE confirms that 2017 is practically another lost year for the Brazilian economy. "My hope for an exit from the recession is purely statistical. Because, if we grow 1% in 2017, we will probably have one or two positive quarters at the end of the year. This will statistically lead to an exit from the recession, but it won't be pleasing, because the response in terms of employment and income will be very weak. Growing 1% in 2017 is clearly insufficient. The Herculean task of demonstrating numbers more resembling a recovery will fall to 2018," he states.
Read in full Paulo Rabello's interview.