If elected, Lula should emulate Biden’s infrastructure plan

Brazil needs a major infrastructure plan similar to the one sponsored by the Joe Biden Administration to pull the economy out of recession amid an increasingly adverse international scenario, according to a senior adviser to Luiz Inácio Lula da Silva, who is leading the race. presidential.

Guido Mantega, who became finance minister in 2006 under the Lula government, warned that aggressive monetary tightening by the United States coupled with slower growth in China would make the recovery of America’s largest economy slower. America will be much more difficult in the coming years. Such a combination is potentiallymortal” for Brazil, he said.

As minister, Mantega sponsored a series of countercyclical fiscal policies to prop up Brazil’s economy as the world reeled from the impact of the global financial crisis. Now he looks to the United States and Italy as examples of how public investment must once again be the engine of growth.

“The private sector cannot find a way out of the crisis”, he said in a video interview from São Paulo, adding that he is one of several economists who discuss economic ideas with Lula. “We have to do what Biden is doing, what Mario Draghi is doing in Italy. When you’re at war, you have to have a war budget”.

The fight against poverty, he added, would require even more drastic action on the part of the Government, since investment takes time to have an impact on the well-being of the population.

Boosting public investment would mark a departure from the liberal policies that Economy Minister Paulo Guedes has sought to implement during the Jair Bolsonaro administration. As Brazil boasts its best fiscal numbers in years under Guedes, the country is still reeling from the effects of the coronavirus pandemic.

The economy has slipped back into recession and inflation is above 10%. The labor market added 2.7 million formal jobs in 2021, but lost 265,811 of them in December.

many alliances

Mantega said that Lula, if elected in October as initial polls indicate, would not impose an economic program led solely by his leftist Workers Party, whose image was tarnished by a series of political scandals during his 13 years in power.

“Lula is going to have many political alliances, he cannot govern alone”, Mantega said. “After the group of parties is confirmed, a program will begin to be discussed that has to be accepted by all, it cannot be a program imposed by the Workers’ Party”.

Mantega, Brazil’s longest-serving finance minister, acknowledged some “mistakes” in economic policy during Dilma Rousseff’s presidency, even when he was her Treasury Minister. He cited as an example the government’s intervention in the electricity sector to lower electricity prices in 2012.

“This is not functional. Eletrobras shares fell and there were many investors in Eletrobras. Actually, I think we made a mistake there.“, He said.

He also said that he would not be part of Lula’s economic cabinet in a possible new administration.

“I have no intention of going back.” He said. “The economy has cycles. I stayed in the Government for 12 years in a row. I already gave my part”.