Document was taken to public consultation and brings two scenarios predicting the growth of Brazil until 2031
An invitation to society to say what it expects from Brazil in the next 12 years. This is the message that the federal government conveyed during the launch of the National Strategy for Economic and Social Development (Endes), this Monday afternoon, the 11th, at the Ministry of Planning, Development and Management. The event marked the sending of the document to the public consultation (will be available until August 15th on the MP's website), bringing two scenarios for the country's economic growth.
The first, which presupposes carrying out broad reforms in order to raise the growth potential of the Brazilian economy, forecasts an average GDP growth of 3.86% for the coming years, and the second, prepared with the hypothesis of reforms that would enable the long-term fiscal balance, but without changing the current growth potential of the Brazilian economy, projects an average GDP of 2.3%. In both cases, maintenance of the spending ceiling was considered.
According to Minister Esteves Colnago, the first growth scenario of 3.86% of GDP is feasible, as long as the government does its “homework”, approving structural reforms that guarantee the sustainability of fiscal accounts – social security reform, administrative reform and verification of social plans – and also carrying out microeconomic reforms – tax reform, positive registration, changes in legal frameworks, etc. –, which allow immediate gains in the productivity of the country. “If the next government moves in that direction, our projections indicate that in 2021 it will be possible for the country to reverse the deficit trajectory and start generating a primary surplus”, he explained, adding that Brazil has enormous growth potential.
In the other scenario, Colnago reported that microeconomic reforms were not included. “By moving forward exclusively with structural reforms, it will already be possible to ensure a sustainable path for the public debt”, pointed out the minister, emphasizing that this is the premise for guaranteeing an economic environment that provides stability, with low interest rates and inflation within targets. “We need investors to continue to have security, showing that the government is solvent, even if it still does not generate a surplus in the short term”, he highlighted, noting that in neither of the two scenarios will the document have extraordinary revenues, to be as prudent as possible.
The government's objective is that, after going through 60 days of public consultation, with the incorporation of criticism and suggestions from society, the National Strategy can be used in the transition of Government with a view to guiding, articulating and influencing discussions on the other instruments of the balanced national development planning (national, regional and sectoral plans, in addition to the Pluriannual Plan – PPA). “The more society participates, the more legitimacy we will have. We need to seek consensus, as it is impossible to plan a 12-year horizon considering only one government vision”, Colnago emphasized, emphasizing that the Strategy is a challenge for the State and society.
According to the president of the Institute of Applied Economic Research (Ipea), Ernesto Lozardo, to reverse the near-insolvency situation, the State must be the articulator of development, no longer the vector. “An emerging country cannot do without planning, hence the merit of the National Strategy. It's a step into the future." The chief minister of the Civil House, Eliseu Padilha, highlighted the importance of the government proposing a responsible dialogue with society to guide the country towards the desired future. “We need to follow the reform agenda to guarantee the efforts not only of this government, but also of the next ones”, analyzed Padilha, during the event to launch the document, which also had the participation of the president of the Federal Audit Court (TCU). , Raimundo Carreiro.
In addition to GDP growth, Esteves Colnago said that the intention of the National Strategy is to adopt measures to raise the Human Development Index (HDI). According to him, the goal is that during this period Brazil evolves from the group of countries with a “high” HDI index – where it currently finds itself – to the group of countries with an HDI considered “very high”. Currently, Brazil's HDI is at 0.754 and the objective is for us to exceed 0.80 by 2031. “The main guideline of this document is to propose raising the income and quality of life of the Brazilian population to the standards verified in developed countries” , noted.
To reach these numbers, the National Strategy diagnosed the need for Brazil to advance in access to and quality of health, education and security services, facing one of its greatest challenges: high social and regional inequality. Faced with these issues and others of equal relevance for the country's development, the document was structured around five axes: economic, institutional, infrastructure, environmental and social, all of them with indicators* that make it possible to measure the transformations. “We also analyzed the global megatrends of the period, the projections on the macroeconomic scenario that the country will be inserted until 2031, the possible risks and the mitigating measures”, stressed Colnago.
Differently from the Pluriannual Plan (PPA), the Annual Budget Law (LOA) and the sectoral plans, the National Strategy will present the main lines of conduct of the country, without going into execution details. The proposal is for the Strategy to be the main guideline for these other plans. According to the minister, today, there are more than 70 sectoral plans in the country, each using different deadlines and considering different scenarios. “We need a framework that shapes the sectorial plans, so that they are developed following the same expectations and the same macroeconomic scenario. Sectoral plans need to relate to each other, taking into account where the country wants to go”, he explained.
After the end of the elaboration process of the National Strategy for Economic and Social Development, the government will deliver the document in the hands of the next President of the Republic, who will be elected in October of this year. “It is a legacy that we need to leave for the country”, added Esteves Colnago.
Brazil without the reforms
Despite not being part of the scenarios envisaged in the Strategy, the Ministry of Planning also carried out studies on Brazil's strength, in case the next government chooses not to approve any structural reform. In this case, budget tightening would lead the country to lose productivity and reduce investments. Thus, average GDP growth over the next 12 years would be lower than the current potential of the Brazilian economy, reducing the annual rate of change to something around 1.3% and Brazil will only have the possibility of running primary surpluses in public accounts again in 2025.
In addition to the Ministry of Planning, the Civil House, the Ministry of Finance, the Ministry of Transparency and Comptroller General of the Union, the National Development Bank (BNDES), the Brazilian Institute of Geography and Statistics (IBGE) and the Institute of Applied Economic Research (Ipea).
* In addition to GDP per capita and the HDI, the following indicators were selected for the National Strategy:
On the economic axis: real variation in productivity (source: IBGE); and current foreign trade (source: IBGE).
On the institutional axis: Global Competitiveness Index (source: WEF); and degree of ease of doing business (source: World Bank – Doing Business ranking).
On the infrastructure axis: percentage share of infrastructure works in GDP (source: IBGE); Logistics Performance Index (source: World Bank); and percentage of households with satisfactory well-being (source: IBGE).
On the environmental axis: greenhouse gas emission intensity (source: World Bank); and participation of renewable energy sources in the energy matrix (source: EPE/MME).
On the social axis:
Education: percentage of 16-year-olds who completed elementary school (source: PNAD Contínua/IBGE); and Basic Education Development Index – Ideb (source: INEP/MEC).
Health: infant mortality rate (under 5 years old) (source: Ministry of Health); and life expectancy at birth (source: IBGE).
Income: percentage of the population below the poverty line: R$ 170.00 – Bolsa Família amount (source: IBGE); and GINI index (source: PNAD Contínua/IBGE).
Safety: homicide rate per 100,000 inhabitants (Source: Ministry of Health and IBGE).
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