BTG Pactual’s founder and chairman of the board, Andre Estevez, considers Bolsa Familia an important social program, but said its current size is disproportionate to Brazil’s economy.
“I have been a supporter of Bolsa Familia since the conception of the program. It is very important, but it has grown too much, becoming bigger than France, Norway and Sweden, and is incompatible with the labor shortage (in the Brazilian job market). Adjustments are needed,” the banker said at an event held at the Milken Institute this Monday (10th).
Estevez said fiscal adjustments of about 2% of gross domestic product (GDP) are needed to keep domestic interest rates in single digits.
“Central banks follow a script and are almost artificially intelligent agents. There is not a lot of initiative, they are modeled,” Estevez said.
“Interest rates are too high. Brazil didn’t get 15%, but interest rates will start coming down in January. What’s more important is how low they go, and that depends on the next government’s fiscal policy. Ideally, fiscal and monetary are more aligned. Fiscal adjustment requires 2% of GDP and I don’t see any difficulty in doing this. We have very high spending,” he added.
However, when it comes to the trade war, bankers believe that the move in negotiations with the US to eliminate the 50% surcharge is the right one, but emphasizes the actions of companies.
“The private sector needs to continue to wear its hat of playing a role in geopolitical relevance and explain how we can be important by providing food and energy,” Estevez said.
He said he believes now is a good time for Brazil, given the availability of cheap and green energy in the country, where the wave of artificial intelligence is coming.
“We have to follow our mission. There’s no point in building a chip factory. We can be the right infrastructure provider. If we play the game right, we can capture this global need.”
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