Brazil’s pro-market economic team, slammed by the pandemic, saw the resignation of two of its senior members in what Economy Minister Paulo Guedes called “a stampede.”
Salim Mattar, a businessmen turned privatisation secretary, quit on Tuesday, Guedes said.
Paulo Uebel, the government’s special secretary of de-bureaucratisation who was charged with overhauling Brazil’s burdensome public sector with an administrative reform, also stepped down.
Guedes said Mattar asked to leave because he was unhappy with the pace of the privatisation agenda. Uebel left because the administrative reform designed to overhaul the careers of public servants has been put on hold, the minister said, adding that the timing of the agenda is the prerogative of President Jair Bolsonaro.
Guedes, the powerful free-market guru to far-right President Jair Bolsonaro, is battling to steer Brazil back toward his agenda of austerity and privatisations – no easy task during a pandemic that has hammered the country and forced the government into months of emergency spending.
Speaking to journalists Tuesday, Guedes said he understood Mattar’s discomfort. “I told him he had to fight, that there’s no point in asking for God to help,” he said outside the Economy Ministry after a meeting with lower house Speaker Rodrigo Maia and lawmaker Arthur Lira.
He acknowledged that both had resigned in frustration at the slow pace of both. "It was a stampede," Guedes said.
The departures are the latest losses for the market-friendly economic team, which was forced to put an extensive reform agenda on hold because of the pandemic.
In the past two months, Banco do Brasil CEO Rubem Novaes, Industry Development Secretary Caio Megale and Treasury Secretary Mansueto Almeida have left. Guedes has now lost eight top aides in total since Bolsonaro took office in January 2019, nearly half his original team.
The government’s focus in beefing up the social agenda and easing the tax burden has left other areas on the backburner, said Leonardo Barreto, a director at Vector Relacoes Governamentais consultancy.
“The government is facing difficulties in defining the economic agenda,” Barreto said. “There are several initiatives that were sent to Congress, but no coordination, no dialogue. That only worsened with the pandemic.”
Despite the losses, Guedes vowed to get his reform agenda back on track, starting by fighting political pressure to lift the cap on federal spending.
Speaking alongside Maia, Guedes said they had agreed that it was time to rein government spending back in, after pandemic emergency measures such as monthly stimulus checks of 600 reals (US$110) to help workers hit hard by stay-at-home measures.
"If the pandemic dies down by the end of the year, as we're all hoping, why would we extend [emergency spending] into next year?" he said. "On the contrary... our reaction to this stampede today is that we have to speed up reforms."
Bolsonaro took office vowing to privatise a raft of state companies, but hardly any have been sold so far.
Meanwhile, despite the debt hawks' efforts, Brazil's national debt has ballooned from 75.8 percent of Gross Domestic Product in December to a record 85.5 percent of GDP in June, and is forecast to hit nearly 100 percent by the end of the year.
Speculation has swirled recently that Guedes could be sacked, though Bolsonaro has publicly stood by him so far.
Brazil has more infections and deaths in the pandemic than any country except the United States: more than 3.1 million and 103,000, respectively.
Economists polled by the central bank expect the economy to contract by a painful 5.62 percent this year.