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  • President Jair Bolsonaro (L) shakes hands with Paulo Guedes, economy minister, in Brasilia, Brazil Jan. 1, 2019.

    President Jair Bolsonaro (L) shakes hands with Paulo Guedes, economy minister, in Brasilia, Brazil Jan. 1, 2019. | Photo: Reuters

Published 3 January 2019

The minister considered that the pension system reform will be his "first and biggest" challenge as he seeks to save US$12.9 billion in the next decade.

Brazil's Minister of Economy, Paulo Guedes, confirmed that pension system reform, accelerated privatizations, and tax reductions will be the "pillars" of the administration of President Jair Bolsonaro.

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Guedes said that the structural reforms that Bolsonaro will send to Congress will support the so-called "expenditure ceiling," a mechanism established by Michel Temer's Administration to control public accounts.

The minister considered that the pension system reform will be his "first and biggest" challenge as he seeks to save US$12.9 billion in the next decade.

"The retirement system is currently a factory of inequalities. Those who legislate have the highest pensions, those who judge have the highest pensions, the Brazilian people, the smallest," the economy minister said, adding that he would "free" unemployed Brazilians from the current pension system and give them "the option" of having an alternative.

During the electoral campaign, both Guedes and Bolsonaro defended a deepening of Temer's labor reform. On one occasion, with Bolsonaro stating that workers would have to choose "between more rights or more employment."

Following such logic of reasoning, Guedes also evaluated that public spending is always "the Achilles' heel" of any stabilization attempt and "the greatest evil" of the Brazilian economy.

In line with his proposal for a minimal state solution, Guedes explained that he will promote accelerated privatizations, "tax simplification and reduction" and the approval of structural reforms.

Brazilians have named Guedes as "superminister" due to the powers he received from Bolsonaro to command all economic policy. This means that Guedes leads a ministry in which the Treasury, Planning and Industry and Commerce portfolios have been merged.

To accelerate the liberalization of the economy, Brazil's right-wing president adjusted more than 15 measures on his first day in office.

In addition to reducing the minimum wage set by Congress for 2019, Bolsonaro extinguished the Secretariat of Diversity, Literacy and Inclusion; conferred power to the Ministry of Agriculture to demarcate Indigenous peoples' territories; extinguish the ministries of Labor, Culture, Cities, Sports and Racial Integration; as well as announced summary dismissal of public workers who criticize his policies.

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