Brazil to receive $3 bi from BRICS bank for investment

Brazil will receive $3 billion from the New Development Bank (NDB) in the coming months, the country’s Economy Minister Paulo Guedes said Wednesday (Nov. 18). Based in China, the bank is formed by BRICS countries—Brazil, Russia, India, China, and South Africa.

“The bank was founded in 2016. Brazil had borrowed merely $700 million. In the coming two, three months we’ll have $3 billion dollars to bring into investment to help tackle the coronavirus and to boost infrastructure,” the minister said during an event promoted by a magazine.

Guedes once again argued for the maintenance of the spending cap, which limits the growth in federal expenditures to the increase in inflation. He denied the government plans to introduce breaches to surpass the cap, adding the economic staff does not pretend to find shortcuts.

“An easy way out is breaking the ceiling. We’re not going to do that, as it would be irresponsible towards future generations,” he declared. The minister linked any reform on the spending cap to structural overhauls that lower the growth in public expenditures and the restraining of 96 percent of the budget.

“Until Brazil musters the courage to face up to this automatic spending indexation problem—where the political class does not control 96 percent of budgets—we cannot dream of foregoing the spending cap,” he argued. “The ceiling was placed there without walls. They brought the ceiling, but there were no walls, which are the reforms. What’s worse, with a floor that goes up all the time, pressing government spending against the ceiling.”

Recovery

The minister restated that the Brazilian economy is recovering in a V (sharp decline, followed by solid increase) and repeated the statements from recent days, saying that inflation spikes are temporary. He went on to say that, after the recovery of the labor market in the last months, the country should close out 2020 with a third of the job losses reported in the 2015 crisis.

In 2021, Guedes added, the government believes growth should reach three to four percent. In his view, next year will be marked by “strong cyclical recovery.”