Nelson Barbosa might be the change that Brazil’s economy needs to pull itself from the financial mire they’ve found themselves in. But that didn’t stop the office and public from ushering him into the position with skepticism and cold indifference.
Concerns Grow Over Worsening Brazilian Fiscal Deficit Crisis
The critical majority is worried that Barbos will continue the pattern of failing to deliver viable solutions for the floundering financial state of Brazil. The country’s deficit is growing to become a nearly-unmanageable problem, and it remains to be seen if Barbosa is up to the monumental task.
The Brazilian currency of the real has depreciated 1.57 per cent against the dollar this year. The overall deficit of Brazil is about 10% of the gross domestic product.
This has been the worst recession that Brazil has faced down since the 1930s, and Brazilian economists are predicting a barely better year for national economic growth in 2016. Radical economic reform is needed, and has repeatedly failed to have been delivered from the Brazilian economic officials in the past.
Public opinion on Barbosa seems to be this: he already seems less motivated in the position than his predecessor, Joaquim Levy, who couldn’t seem to completely pull Brazil’s deficit back from the brink despite fervent attempts at improvement.
Levy and Barbosa Blocked By Congressional Chaos
Levy’s proposed spending cuts and tax hikes that were aimed to stem the hemorrhaging of the fiscal deficit were repeatedly blocked by President Dilma Rousseff’s administration and within Congressional conflict. In summation, the political bickerings of higher departments within Brazil halted Levy’s attempts at fiscal progress and improvement.
Those who remain skeptical of Barbosa have expressed concerns that he isn’t as aggressive as Levy, and they worry that Barbosa won’t be able to take on the Congressional and Presidential offices in the push for a better Brazilian economy.
Levy took office in January of 2015, but resigned earlier this month after two major investment-grade credit ratings. After his resignation, economists and government officials have lost confidence in the ability of Levy or Barbosa to make any lasting improvements to the fiscal deficit.
Pension System Reforms Won’t Be Enough
The current plans of Barbosa are reforms to the pension system. But the proposed changes will have to go through Congress at some point in 2016; a process that could take months and may not pass, given Congressional history.
Even with President Rousseff backing Barbosa’s reform proposals, it’s not likely that the changes will successfully pass through Congress. Rousseff is facing threats of impeachment while members of Congress are dodging potential corruption charges linked to the state-owned oil company, Petrobras.
With Brazil’s leaders entangled in their own political problems, Barbosa may not be able to push through the chaos for fiscal reform. The lack of political support backing Barbosa’s economic changes is more a reflection of the current state of Brazilian government as a whole rather than the ineffectiveness of the finance chief, no matter who is put in office.