The government continues to draw the wrong conclusions from the Correios financial crisis, which is why it persists in resisting the most obvious solution: privatization. The company’s problems are structural. According to figures from the newspaper Valor Economico, even in a year when the economy is growing at a reasonable level and the delivery market is booming, the post office’s expenses exceed its revenues by R$10 billion. No company can survive with annual losses of this magnitude.
- mail: The requested loan of R$10 billion is more than double the largest amount ever contracted by a state-owned company that has been approved by the Ministry of Finance.
Koreios is rushing to borrow money as he prepares to close the account in 2025. The first attempt to obtain 20 billion reais failed. The deadline for responses was short, and the banks that spoke offered conditions that were unacceptable to state-owned enterprises. By launching a second round of funding, the company hopes to attract smaller banks and gain access to at least 10 billion reais to cover the shortfall. If we can do that, it won’t be long before despair returns.
The current restructuring plan is expected to increase revenues by R$5 billion and accelerate cost reductions with the support of a voluntary redundancy program. These are welcome promises. Unfortunately, they will not be able to free Correios from political interference and legal obligations that limit its management autonomy. Plans designed to please investors and attract confidence should aim to prepare the company for privatization. This sensible model developed by BNDES was in place under the Jair Bolsonaro government, but unfortunately, as soon as President Luiz Inacio Lula da Silva came to power, everything was stopped by the ideological resistance of the PT.
- mail: Closure of 700 branches and real estate fund: Postal Service’s plan to emerge from crisis
Five of the six most profitable post offices in the world are fully or partially private. Of the 11 cases that recorded losses, only one is not 100% controlled by the government. A study by the independent U.S. Postal Service Office of Inspector General said: “The 15 post offices in our sample that operate as private companies typically have greater operational freedom than government-owned positions to optimize costs, manage pension funds, and borrow for capital investments.”
The life of a public postal service administrator is far from easy. The structures put in place to receive and deliver mail remain almost intact, but the proliferation of mobile phones has reduced demand. Does anyone still send letters? While it is true that the parcel delivery sector is growing rapidly, state-owned companies face more agile and technologically advanced private competitors in this space. Publicly traded companies bound by obligations and restrictions only accumulate problems. In the case of Brazil, there is a history of scandals and misconduct. Governments must not fail to resolve the fiscal crisis by seeking to obtain credit, reduce costs, and increase revenue. All that remains is to move on to the next step and transfer management to the private sector.
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