The Brazilian crisis that began in 2014 was, in a great sense, a crisis of political confidence, associated with economic policy misconceptions or misconceptions of the then government. It then hit the bottom of the well and more recently we began to emerge from the crisis, slowly and gradually, as recent economic indicators suggest.
But political uncertainty has remained and the crisis of confidence in Brazilian public governance remains latent. Signs that economic agents have become accustomed to navigating the storm and continue to operate their activities, perhaps with caution, since it is necessary to pay the house bills, employees, vendors, plant crops, replenish livestock, or turn the industry around.
In all this, one aspect is noteworthy: in the process of economic recovery, annual inflation fell to 2.6% and the basic interest rate of the economy (Selic) plunged by more than half, reaching 6.75% per year. But consumer interest, or even for business, does not seem to keep up with this degree of reduction, a fact repeatedly criticized in the media.
By its very nature, banking activity lives by evaluating (and well) the risks involved in its credit operations, usually in the medium and long term. Is it then that the stubbornness of interest in retail banking is also translating the perception of a considerable political risk to the country’s economy?
Let’s imagine yes. So political uncertainty would be inhibiting the economic energy of consumers and entrepreneurs, perhaps even contaminating the look of international risk rating agencies that downgraded the Brazilian rating. But if the crisis of confidence hampers our reconstruction, the chance to restore credibility happens within seven months, in the elections.
Who should we elect? Apparently, common sense points to candidates with an agenda focused on the constitutional reforms demanded by the reality of the facts, such as pension, tax, federative and political reforms. It would be a basic pillar of choice, without which other demands such as safety, health and education may run out of the future.
More: a study by the International Monetary Fund (IMF), considering data from 92 countries between 1975 and 2015, indicates that there is generally an association between political fragmentation and increased public debt of countries. The more fragmented the policy, the greater the resources to meet parliamentary interests, in the name of stability of party coalitions.
Political fragmentation, measured as number of parties and their voting power in Congress, increased by 30% in Brazil from 2010 to 2014, from a previous increase. And the way political chatter walks the streets and social networks, this fragmentation can grow more. Meanwhile, public debt stands at 80% of GDP and may reach 100% within two years, analysts say.
Restore the political trust of society and compact party politics in Congress. Two challenges that we have in the next election, with an eye on the economic and institutional sustainability of the country. Even to better enable the sustainability we need so much – from pocket to table, in the countryside and in the city.
* Coriolan Xavier, member of the Sustainable Agricultural Scientific Council (CCAS) and Professor of the Center for Agribusiness Studies of ESPM