Passage of a pension reform bill this month in Brazil’s lower house of Congress would come as no surprise to attendees of a Global Atlanta Consular Conversation in late June.
During the luncheon interview hosted at Miller & Martin PLLC’s Midtown office, Consul General Carlos Henrique Moojen de Abreu e Silva was immovable in his optimistic views on the prospects for reform under new President Jair Bolsonaro.
To Mr. Abreu, who arrived in Atlanta earlier this year from another posting in Sydney, the trajectory of Brazil’s fiscal and economic policy was clearly positive after years of uncertainty.
The reform to Brazil’s pension system has already weathered minor changes that have cut its projected savings to about $244 billion for the coming decade, which Mr. Abreu said is still in line with government expectations. Further changes could be on the horizon before additional votes in the Chamber of Deputies and then in the Senate.
Mr. Abreu is convinced that the bill will be approved and enacted into law by October.
“Savings from the pension system, together with other structural reforms and a sweeping privatization program, will put the fiscal house in order and, combined with infrastructure investment, will pave the way for sustained growth in the future,” the consul general said.
Not all analysts are convinced that this step forward portends bigger shifts ahead, but Mr. Abreu sees such reforms as the only option for tackling Brazil’s debt and righting its economic ship. South America’s largest economy pays the equivalent of “a Marshall Plan per year” — some $120 billion — in servicing its domestic debt, he said.
“Imagine if we liberated these resources. It would have an immediate impact on our growth rates,” the consul general said.
Besides, these moves to boost investment are woven in with other societal shifts that will make the changes more resilient, he added.
Public backlash over corruption helped fuel Operation Car Wash, or Lava Jato, one of the most far-reaching corruption investigations in modern times. The fallout from the probe over the improper awarding of Petrobras contracts spread throughout Latin America and ensnared some of Brazil’s top companies and politicians, including many previously seen as untouchable. The probe, however, remains divisive, with some opposition politicians questioning the impartiality of the judicial process that generated the convictions.
Still, Mr. Abreu, who carries the rank of ambassador in Brazil’s foreign service, linked Brazil’s debt reduction efforts to its anti-corruption drive.
“In the past, presidents used to buy majorities in congress to have their bills approved. This opened the possibility of patronage, pork barrel spending — you could call it corruption — but this has ended. What is happening now is that this [pension reform] bill has seen some changes, it’s true, but the overall fiscal impact is being preserved.”
Mr. Abreu says his optimism is founded on the way Brazil has developed over time. As a student of economics back in the 1980s, Mr. Abreu believed that the return of democracy after a military regime would be a panacea for the country’s social ills.
” I really thought it was like a magic thing. It’s not. Your institutions need to mature, and only now do we have our institutions sufficiently mature to fight against corruption,” he said.
President Bolsonaro, meanwhile, was elected in part to give voice to the disgust many felt for the ruling class, despite alleged authoritarian tendencies that some believed might test the limits of those very institutions.
Mr. Bolsonaro has been compared by many to U.S. President Trump for his brash populism, coziness with religion and propensity to speak his mind, no matter the fallout. But there’s a stark contrast economically: Mr. Bolsonaro has pledged to open Brazil’s economy rather than questioning the very basis of multilateral system.
For his part, Mr. Abreu sees no authoritarian tendencies in Mr. Bolsonaro. On the contrary, he said that “Bolsonaro was democratically elected and is very respectful of our institutions, values free press, and, moreover, the president believes in God.”
Mr. Abreu said the president seeks put Brazil on the path to joining the Organization for Economic Cooperation and Development, the club of 36 rich countries that aims to set international norms on taxation, finance and other governance matters. Brazil is a “key partner” country with the OECD, but it hasn’t yet graduated to member candidate status.
Plans call for Brazil later this year to approve a bill simplifying a byzantine tax system that many complain saps productivity in a country now struggling with tepid growth and uncharacteristically high unemployment.
“If you see Brazil now like a mountain of red tape, in four years that picture will change completely, and this is one of the priorities of the present economic team; to begin with our tax system, which is a nightmare,” Mr. Abreu said.
He added that Brazil is planning to rebalance more debt through privatization spree orchestrated by Chicago-trained economy Minister Paulo Guedes. Already Petrobras has sold off its fuel distribution unit for more than $2 billion. The state-run electrical utility as well as airports and seaports could be up for grabs soon.
“Why am I so confident?” the consul general continued. “Because our democratic institutions are strong enough and they’re moving in the right direction, and because in reality we have no option, because there is no magic or miracle in economics. Orthodox policies become orthodox because they have been successful. You don’t need a lot of creativity. You know really what you need to do, and in reality we have a fantastic economic team in Brazil. It’s likely one of the best we have ever had.”
With Mr. Bolsonaro and Mr. Trump in power, Mr. Abreu could foresee an eventual free-trade agreement between the U.S. and Mercosur, although negotiations on such a deal have yet to begin, and they would need to involve Brazil’s partners in that bloc: Argentina, Paraguay and Uruguay.
What has happened already, however, is an open-skies treaty between the U.S. and Brazil enacted last year, which liberalizes air travel between the countries.
Mr. Abreu said he hopes that will bring down the high prices that airlines like Atlanta’s Delta have been able to charge on nonstop routes, due in part to limited landing slots. That would help draw more tourists and business travelers, who can now visit Brazil without a visa for up to 90 days thanks to a breakthrough reached in March ahead of Mr. Bolsonaro’s visit to Washington.
Cooperation With Georgia
Beyond the macro issues, Mr. Abreu’s message was that the consulate desires to foster deeper collaboration with Georgia and the Southeast in light of these changes.
Georgia companies with major interests in Brazil, from Coca-Cola Co. to aluminum giant Novelis Inc., and point-of-sale terminal maker NCR Corp. to credit card processor First Data, should see an improved operating environment.
And armed with more certainty, Brazilian companies in a variety of sectors will invest further in the region as they look beyond Florida, their traditional port of entry, Mr. Abreu said.
“It makes a lot of sense to internationalize. Especially in today’s world, you cannot rely only on one market,” he said.
That reality is translating into success in south Georgia, a region that has notched Brazilian wins in recent months, from the Taurus pistol plant in Bainbridge to a new fertilizer factory near Moultrie and a construction equipment headquarters near the Port of Brunswick.
Mr. Abreu sees particularly strong potential not only in manufacturing and services, but also in agribusiness. Brazil is one of the world’s largest producers of commodities like soybeans and coffee, and it’s a huge consumer and producer of forestry products, biofuels and poultry —all sectors relevant to Georgia. Pilgrim’s Pride, for instance, which operates multiple chicken plants in the state, is owned by Brazilian meat producer JBS.
Georgia has an office in Sao Paulo that recruits investors and assists companies in exporting to Brazil; the state is flush with inquiries for local products, especially in the food sector, despite imports being relatively expensive in Brazil’s protected market.
Fintech is another field in which partnerships seem to be blossoming. Many payments giants based in Georgia have processing deals with banks in Brazil’s highly developed credit card sector, and companies like Atlanta-based Fleetcor do major business there. but Mr. Abreu would like to see a structured effort to help small companies and startups better connect.
“I will make this one of my top priorities — to try to bring our business communities together, especially in fintech,” he said, partly because the sector can be so impactful for employment in an area’s tech ecosystem. More than 30,000 people work for the 100-plus fintech firms in Georgia.
“Creativity is the name of the game in fintech. Even a small startup can have a fantastic idea, and within one year can have a very successful company which is not small but medium-sized, and there’s room for cooperation, mergers. I believe in this idea of promoting and connecting our startups. In reality, big companies don’t really need government support, but small companies and medium-sized companies, and we can make a difference when we open doors for them.”
The consulate provided support to the Invest Atlanta’s recent delegation to a fintech conference in Rio de Janeiro, which remains an Atlanta sister city. The consulate is also now officially partnering with the Brazilian American Chamber of Commerce Southeast (which helped promote the Consular Conversation event) to encourage tangible business exchanges.
Lucia Jennings, the chamber’s longtime president, said at the event that she would like to see Brazil begin promoting itself a bit more aggressively in the U.S. market.
Mr. Abreu said he is already working on it, especially when it comes to bringing in high-level visits from Brazilian officials to Atlanta. But the pitch will be even stronger next year, once reforms have been realized.
“The second semester of this year will be a turning point in our history,” he said. “What you’re seeing now is a Brazil with strong, strong democratic institutions and they are becoming stronger day by day, and this is what will make Brazil a great country. I’m very happy to be here as a Brazilian witnessing this process.”