Economists Armínio Fraga and Pedro Malan highlighted, in a webinar by the CEBDS Leaders Council this Wednesday, the importance of increasing the efficiency of public management in order to increase investments in education and basic sanitation
One day after the release of the letter signed by 17 former Finance Ministers and former Central Bank presidents with guidelines for a low-carbon economy, economists Armínio Fraga and Pedro Malan met with CEOs of the Board of Leaders of the Brazilian Business Council for Sustainable Development (CEBDS) and reinforced the message that it is necessary to understand the nature of the challenges that humanity faces today in order to seek a post-pandemic economic recovery that is positive for people and the planet. And they advocated for the State to be more efficient in managing public resources as one of the ways to restore the capacity to invest in education and basic sanitation.
“How we will get to 2050 will depend a lot on how we address the challenges of education, for example,” said Malan, this Wednesday (15). “The challenges come in layers, but we need to prioritize. The issue of education, without a doubt, is one of the most urgent,” commented Marina Grossi, president of CEBDS, who mediated the debate. For Fraga, the health crisis triggered by Covid-19 has exposed the enormous lack of basic infrastructure in Brazil, opening a window of opportunities for both public and private investments. “Infrastructure must be the locomotive of the country’s development for a very obvious reason. The demand is enormous,” observed the man who presided over the Central Bank from 1999 to 2003.
In order to restore the state’s investment capacity, according to Fraga, it is essential to improve the efficiency of the state. “Approximately 80% of public spending in Brazil is directed to payroll and social security. There is room for improvement,” he stated. For Malan, who was president of the Central Bank between 1993 and 1994 and Minister of Finance between 1995 and 2003, the government leaves much to be desired in terms of both spending and taxation. “The level of government spending is very high and its composition leaves much to be desired. The fact is that we spend a lot and poorly, whether in level, composition or effectiveness. And the same goes for taxation, which is also high,” he commented. In this context, economists advocate prioritizing an agenda of fiscal, tax and state reforms.
Another point highlighted by Fraga is related to the granting of subsidies, considered high by the former president of the Central Bank. “There are a lot of subsidies and the income tax structure is regressive, where it is possible to save about three points of GDP without adopting American income tax rates, for example,” he suggested.
On the other hand, Fraga also acknowledged positive points in the national context. “The institutions are responding, despite some difficulties. We have a free press and more engaged young people. The reform agenda is still alive and this is positive because Congress has been working well,” he commented.
The fight against illegal deforestation in the Amazon and the creation of a carbon market in Brazil were points discussed by the economists. “We have to think about the enormous opportunities we have to rationally explore the wealth of the Amazon, conserving biodiversity,” said Malan. “The challenge of human development in the Amazon is equally enormous. There are 25 million people living there,” added Fraga.
For him, the creation of a carbon market in Brazil should be part of a larger strategy. “There is already a maturity for implementing a carbon market in Brazil. I don’t know why we don’t move forward with this agenda. It is part of a green Brazil, it is the face of Brazil”, argued Fraga. “If we organize our internal discourse, Brazil could play an extremely important role in multilateral discussions on climate change. We have everything we need to do this. And it is a shame that we are currently wasting this opportunity”, lamented the former Finance Minister.
Among the leaders participating in the meeting were André Clark, CEO of Siemens Energy Brazil; Solange Ribeiro, deputy president of Neoenergia; Maurício Adade, CEO of DSM; Marcos Bicudo, CEO of Vedacit; and Paulo Santos, CEO of ERM. The Council of Leaders webinar was broadcast live and is available on the CEBDS YouTube channel: https://www.youtube.com/user/CEBDSBR.
