From Pimentel to Temer: 'you don't save a patient by taking away their antibiotics'

Mines 247 Despite stating he has a "very good" relationship with President Michel Temer, the governor of Minas Gerais, Fernando Pimentel, criticized the fiscal adjustment policy adopted by the PMDB party member and the Finance Minister, Henrique Meirelles. The PT member said the pair are "overdoing it with the fiscal adjustment."

"I've never heard of saving a patient with a serious infection by taking away their antibiotics. That's what they're doing to the Brazilian economy. If you tighten public spending, which is the case in Brazil, the impact on GDP is devastating. The spending cap won't impact us in the short term, but in the long term it will have a very strong and rudimentary impact. The cuts may end up affecting the quality of services provided to the population," Pimentel stated during an interview with Estado de Minas.

Commenting on the state's debt to the federal government, the head of the Minas Gerais executive branch said that the Supreme Federal Court's (STF) decision that the federal government must reimburse the states for losses due to the Kandir Law, a 1996 law that exempted state taxes on exports, would leave the state in the position of creditor and not debtor. Minas Gerais' debt of almost R$70 billion to the federal government, which in the last decade represented a huge burden on state coffers, could cease to exist this year.

"Minas Gerais went 20 years without collecting ICMS (a state sales tax). We calculated that Minas Gerais lost approximately R$ 92 billion. If the debt with the federal government is around R$ 65 billion and our credit is R$ 92 billion, then our debt with the federal government is zero," he added.

According to Pimentel, despite the state's economic difficulties, the overall assessment is positive. "It gives us the right to moderate optimism for the next two years. The main change we made was in the way we approach governing Minas Gerais, with the idea of ​​listening in order to govern. We created regional forums in 2015; I went to all the regions to implement this mechanism of popular consultation. This is working," he said.

"We managed to mobilize the leaders of each region so that demands are raised and reach the government. When resources are scarce, as is our case, we have to use them efficiently. We address the demands, even the small ones, but they are very important. They seem small when viewed from afar, but up close they are significant. A small stretch of road, the renewal of health or security equipment, the renovation of schools—all of this counts for a lot, especially in the interior," he added.

Accounts

Commenting on the state's finances, Pimentel stated that his government ended 2016 "with a real deficit of approximately R$ 5 billion. The forecast was for a deficit of R$ 8 billion. We will not have this deficit because we achieved some victories throughout the year."

According to the governor, "negotiating the debt in the first half of the year, in April we reached a good agreement with the government, which gave us some relief." "And now, at the end of the year, in negotiations with Banco do Brasil, we renewed the payroll contract for another four years. This gave us an injection of R$ 1,4 billion, which allowed us to pay part of the 13th-month salary last year. If it weren't for these two resources, we would have ended the year with an absurd deficit, even worse than predicted," he explained.

"We have R$ 5 billion in outstanding state debt that we have to pay. Our deficit financing capacity is around R$ 4 billion to R$ 5 billion, at most R$ 6 billion. More than that, the public service collapses. That's the case in Rio de Janeiro. There, services are ceasing to function because they've already exceeded their limit. Is Minas Gerais at risk of experiencing the same situation as Rio? No. Not yet. We've managed to avoid it, always with some extraordinary resources," he added.