Economists believe that releasing just R$ 500 per person at FGTS will culminate in another chicken flight to the Brazilian economy

The release of about R $ 30 billion should be positive, but it should not change much the scenario of economic growth of Brazilian GDP in 2019. Overall, the forecast revisions for GDP in 2019 were very marginal. Nothing very expressive. Most analysts point to a growth of about 0.8% of GDP in 2019, ie very small.

For the former president of BNDES and former Minister of Communications, economist and engineer Luiz Carlos Mendonça de Barros, the measures presented by the government are timid to leverage the Brazilian GDP.

Economy Minister Paulo Guedes himself said in early June 2019 that releasing FGTS money before pension reform would be a “chicken flight”. Now, even though the pension reform is not fully approved, the government decides to adopt the measure.

Yesterday, during the measure's presentation ceremony, Guedes said the FGTS withdrawal will be a permanent income, not "chicken flight," as he himself had said.

For Maranhão Governor Flávio Dino, the "release of the FGTS is a good measure, but it is a trickle in the ocean of national recession."

Dino believes that “the expansion of public works is urgent. It is an emergency debt relief program to improve demand. There are ways. But we need to focus on Brazil. ”

Dino thus criticizes the policy of the current government, which is openly aimed at pleasing the international bond market.

Flavio Dino was verbally attacked by President Bolsonaro during a private conversation with the Chief Minister of the House, Onyx Lorenzoni, captured by TV microphones a few days ago.

Although he proclaims himself liberal, Paulo Guedes, the economy minister of the Brazilian government, studies liberating up to 35% of the FGTS to stimulate the economy

The idea is to give money to the population for it to warm the economy. This proposal of heterodox shock, in the best Keynesian model, is of the ultra-liberal Paulo Guedes.

In addition to the release of the FGTS funds (the FGTS is a savings intended for the Brazilian worker. The fund aims to ensure the worker in difficult situations, such as dismissal without just cause), there will also be another round of PIS / Pasep withdrawals. The objective of the plan is to try to revive the economy, via consumption, still in 2019 - the government projection is GDP growth of 0.81%. The Ministry of the Economy wants to allow workers to get up to 35% of the resources of their active accounts of the Working Time Guarantee Fund. The measure is expected to inject up to R$ 42 billion in the economy.

Guedes, faced with increasingly blatant evidence that the current stagnation of the Brazilian economy occurs due to a chronic lack of demand, decides to adopt an openly Keynesian policy.

But even the economists who are progressive and close to the Brazilian left-wing believe that the measure is insufficient to remove the country from the crisis. According to economist Laura Carvalho, "such effects will be temporary and insufficient to counteract the negative impact of cutting public investments and the global slowdown on our economy."

However, economist Laura Carvalho also points to the difference between Guedes' speeches during the political campaign and his actual role as minister.

Carvalho points out that the ultra-liberal Guedes, during the presidential campaign held in 2018 in Brazil, made a "discourse filled with cliché ultra-liberal solutions, among them the radical flexibilization of labor laws, tax cuts for entrepreneurs, privatization of all public assets and indiscriminate commercial opening as a way to guarantee economic growth and job creation. " Now, faced with the reality of the Brazilian economy, Guedes decides to adopt "a measure whose rationality is supported by the Keynesian multiplier of autonomous spending."

The same happened with the government of the also liberal Maurício Macri, in Argentina. In power, he adopted unorthodox measures in the economic area.

Caixa reduces interest rates in an attempt to rekindle the Brazilian real estate market

Caixa, the Brazilian state-owned bank and one of the five largest banks in the country, announced today (5.Jun.2019) the reduction of interest charged on real estate financing and the equalization of the rates practiced in the SFH (Housing Financial System) less than R$ 1.5 million – and in the SFI (Real Estate Financial System) – for higher value properties.

Now the two systems will practice rates ranging from 8.5% per year to 9.75% per year. Interest on the SFH (which also allows the use of FGTS funds) now ranges from 8.75% per year to 9.75% per year. In the SFI, they range from 9.75% to 11%.

For customers who do not have a direct relationship with the institution (counter), the maximum rate went from 11% per year to 9.75%.

The FGTS is an account intended for Brazilian workers. It's a cash reserve. Practically, a saving. The fund seeks to ensure the worker in difficult situations, such as dismissal without just cause and also in the acquisition of a property. The FGTS is a right guaranteed by the Brazilian Federal Constitution that every employer pay monthly.