Summary of Brasilianas.org entrevista Delfim Netto

00:00:00 - 00:55:00

In the Brasilianas.org interview with Delfim Netto, the former Brazilian minister reflects on his tenure in politics and discusses the economic crisis in Brazil. Netto acknowledges Dilma Rousseff's successful administration in 2011 but criticizes her intervention in the energy sector in 2012, which caused a scare in the market and led to a loss of confidence and negative investment growth. He emphasizes the importance of addressing the structural deficit and improving coordination between monetary, fiscal, and debt administration policies. Netto also discusses the need for a serious budget, the dangers of an unregulated financial system, and the importance of organizing Brazil's political and administrative systems for development. He criticizes the excessive economic power of oligopolies and the need for the state to establish clear rules and control sectors where it has a role. The interview touches upon the challenges faced by Brazil's ethanol sector and the need for a significant effort to rebuild the fiscal situation. The overall consensus is that there is a clear understanding of the necessary actions to improve Brazil's economic situation, but the question remains whether there is the political power to execute these actions. The next episode of the program is scheduled to air on the following Monday at the same time.

• 00:00:00 In this section of the Brasilianas.org interview with Delfim Netto, the former minister reflects on his influential tenure in Brazilian politics. Netto acknowledges Dilma Rousseff's successful administration in 2011, which ended with a 3.9% growth rate, 6% inflation, a primary surplus, and a reduced national debt. However, in 2012, when the world began to reduce growth, Rousseff felt compelled to act, leading to a misguided intervention in the energy sector. Despite her honest intentions to reduce tariffs and stimulate investment, Rousseff's intervention in the energy sector was disastrous. Instead of encouraging investment, she caused a scare by lowering interest rates, which led to a decrease in investment and industrial exports due to an overvalued currency. The former minister believes that Rousseff's interventionist and voluntarist approach scared society, causing a loss of confidence and a negative investment growth. This was not just limited to the energy sector but had broader implications for the economy as a whole.
• 00:05:00 In this section of the interview with Delfim Netto on Brasilianas.org, the discussion revolves around the economic crisis in Brazil. The speaker explains how the global economy grew by 3.9%, but Brazil's growth was only 1.9%. The reduction in interest rates affected the industrial sector's profitability, leading to a significant decline in industrial returns. The cost of money remained stable, but the reduction in industrial investment stimuli was the main problem. The government's intervention in ports and infrastructure investment also caused delays, leading to unfortunate consequences. The speaker believes that Dilma's government continued in power despite the economic crisis, leading to a significant fiscal disarray. The crisis was not apparent in late 2013, but it worsened in 2014, resulting in a 6% deficit instead of the expected 3%. The speaker argues that the radical changes in the economy often do not show up in economic indicators until much later, and intuition and knowledge can help anticipate economic crises.
• 00:10:00 In this section of the Brazilianas.org interview with Delfim Netto, the discussion revolves around the economic issues that led to a loss of control over Brazil's debt and economy. Netto expresses his concerns about the situation as early as March 2014, when he felt that things were getting worse, resulting in a 6% deficit of the Gross Domestic Product (PIB). He emphasizes that this was not an accident but a consequence of policies put in place during his presidency. The interview highlights the combination of monetary and fiscal policies that led to a high debt burden, with interest rates and inflation contributing to the problem. Netto acknowledges that there is a need to resolve the fiscal imbalance, but notes that the deficit had not been a significant issue during periods of strong economic growth. He concludes by stating that there is no way to return to equilibrium without addressing the structural deficit, which only became apparent during the economic downturn.
• 00:15:00 In this section of the Brazilianas.org interview with Delfim Netto, the discussion revolves around Brazil's economic situation and the challenges of maintaining equilibrium. Netto emphasizes that maintaining a sufficient surplus is crucial, but only through growth. The current problem is not the structural fiscal imbalance, but the implicit one. To control the relationship between debt and Gross Domestic Product (PIB), the government must demonstrate the ability to do so. The interest rate, currently at 8% of PIB, sets a high bar for growth. The economy faces a dilemma, as there seems to be no solution. However, Alexandre, as suggested, could cut spending to address the issue. The Bank Central's response to inflation, such as interest rate hikes, is not as effective as it once was. Inflation, which has not been significantly impacted by tariff adjustments, is expected to be around 7% next year. The exchange rate and gasoline prices will not increase significantly. The issue with interest rates is that the government cannot sell its debt without remunerating it at a high rate. The government's lack of credibility has led to increased costs for the adjustment. The government, being the largest consumer of resources in the market, holds R$ billions in its Central Bank account. The reason for the interest rate increase is due to the debt stockpile, but the question remains: who will buy the debt if it is not remunerated adequately?
• 00:20:00 In this section of the Brazilianas.org interview with Delfim Netto, the discussion revolves around Brazil's economic situation, specifically the increasing debt and the need to reevaluate fiscal, monetary, and debt administration policies. Netto suggests that Brazil cannot be the only country where the interest rate for liquidating reserves in the banking system matches that of regular operations. He emphasizes the importance of improving coordination between monetary, fiscal, and debt administration policies. Netto also advocates for addressing the issue of an unsustainable pension system and fixing the minimum retirement age, as well as eliminating vinculations in the budget that limit the power of both the executive and legislative branches.
• 00:25:00 In this section of the Brazilianas.org interview with Delfim Netto, he discusses his vision of society as outlined in the 1988 Constitution. According to Netto, this society values individual freedom and equal opportunities, but it also requires a balance in wealth transfer between generations. He emphasizes that everyone starts from the same point and justice is achieved at the exit, not the arrival. Netto also stresses the importance of an efficient production system, such as the market, and the need for social support programs like Bolsa Família to help those who have not yet reached full citizenship. He criticizes the mismanagement of funds in public pension systems as the real cause of the current imbalance, rather than these support programs.
• 00:30:00 In this section of the Brazilianas.org interview with Delfim Netto, the topic of society and its need to be generous and inclusive is discussed. Netto believes that society wants this and that progress for individuals and their neighbors is essential for a better society. He also criticizes the idea of a welfare state causing imbalance, stating that the real issue is mismanagement and the need for a permanent evaluation of programs to prevent parasitic growth. The Congress is also criticized for its lack of discipline and the need to construct a better electoral system with more party loyalty. Netto emphasizes the importance of education for humanization and competitiveness, and the need for more efficient taxation and better program evaluation to improve the current economic situation in Brazil.
• 00:35:00 In this section of the interview with Delfim Netto on Brasilianas.org, he discusses the importance of a serious budget in politics. He emphasizes the need for a mandatory and obligatory budget, with limits on parliamentary amendments. He recalls the success of the Carvalho Pinto plan, which approved a four-year investment budget in one vote, and how it allowed for the execution of projects. Netto also mentions the importance of government officials knowing the budget and the benefits of working within it. He then touches on the future of global politics and the need for control and regulation of the financial system, as seen in past financial crises.
• 00:40:00 In this section of the Brazilianas.org interview with Delfim Netto, he discusses the dangers of an unregulated financial system and the risks it poses to democracy. He argues that the link between political and economic power is a serious threat to capitalism, which was only possible due to private property. The labor movement and the universal suffrage were the instruments that controlled capitalism, but the balance between the ballot box and the market is crucial for a civilized society. When the economic power interferes with the political power, the system becomes unsustainable. To prevent this, Netto suggests protecting the electoral system from economic influence and controlling the expansion of the financial system. He also mentions that the deregulation of the financial system during the Reagan era was not an accident, but a deliberate move by economists who believed that intervention created imbalances, leading to the 2008 financial crisis. Netto concludes by stating that the great moderation was an accident and worsened income distribution.
• 00:45:00 In this section of the Brasilianas.org interview with Delfim Netto, he discusses the importance of organizing Brazil's political and administrative systems to improve their functioning. Netto, who was a Minister in the 1970s and encouraged the internationalization of national companies, believes that a strong state is essential for development. He criticizes current policies and the excessive economic power of oligopolies, stating that the state must establish clear rules and control sectors where it has a role. Netto also touches on the need for a transition from fossil fuels to renewable energy sources and the challenges Petrobras, a Brazilian state-controlled oil company, faces with regulatory bodies like the Securities Exchange Commission in the United States. He suggests that the Ministry of Justice should provide more support to Petrobras, which is a privately run company with state capital, in its dealings with the Sec. Netto expresses concern over the impact of the realignment of fuel prices on the ethanol sector and whether it will be sufficient to save it.
• 00:50:00 In this section of the Brazilianas.org interview with Delfim Netto, the discussion revolves around the economic challenges faced by Brazil. Netto acknowledges the inflationary pressure but criticizes the idea of imposing taxes without inflationary impact. He argues that the state is less efficient than the private sector and that attempts to extract funds from the private sector for the public sector can reduce growth. Netto also mentions the financial instability of several states and their illegal appropriation of deposits, leading to a serious fiscal situation in the country. He emphasizes the need for a significant effort to rebuild the fiscal situation, as the lack of progress in this area could hinder growth. The conversation also touches upon the historical role of notable governments in shaping Brazil's future, with Jocelino being a symbol of optimism and growth despite the destruction of the pension system. The overall consensus is that there is a clear understanding of the necessary actions to improve Brazil's economic situation, but the question remains whether there is the political power to execute these actions.
• 00:55:00 In this section of the Brasilianas.org interview with Delfim Netto, the interviewer announces that the next episode of their program will air on the following Monday at the same time.