Restructuring ministries will be the first step to be announced by President-elect Jair Bolsonaro. It should also prioritize, at the beginning of January, the announcement of the state-owned companies, subsidiaries and shareholdings of the Union that will be privatized / sold. The idea is to deliver at the beginning of the mandate a menu of measures that signals to the financial market and the business community that the government will fulfill its promises to promote greater liberalization in the economy.
In all, there are 29 ministries today. Bolsonaro’s promise is to reduce to something around 15. It is not yet clear which ministries will be kept and which will be extinguished.
By recent signaling, Bolsonaro must turn back in the extinction of at least four ministries. Mines and Energy, Transport, Environment and Industry and Commerce can be kept as independent portfolios. But he had already expressed an interest in fusing them.
The president gave in after receiving a visit last week from representatives of industry and agriculture. On the internet, he said that “if this is their interest, for the good of Brazil, we will meet”.
In infrastructure, which would initially be a super-ministry, the problems are so many and so complex that it must be necessary to keep two separate ones (Energy and Transport). The secretariat of the PPI (Investment Partnerships Program), created by Temer to handle concessions and privatizations, can also be assigned to ministry in the new government, but will continue with its administrative structure linked to the Presidency of the Republic.
Change would be political. Before the PPI was linked to the Secretariat of the Presidency. This arrangement would occur because the PPI will coordinate the entire privatization program with autonomy, as if it were a ministry. In the original plan, the PPI was subordinated to the Ministry of Economy of Paulo Guedes.
It is possible that the Secretariat of Privatization of the Ministry of Planning is incorporated into the PPI, but this is still under discussion.
In the area of privatizations, one of the main promises of the campaign, Bolsonaro’s aides say that the list is ready and goes through last adjustments. The idea is to first make the sale of large state-owned subsidiaries and then extinguish the parent company. In this group, companies that operate at a loss will have priority.
The first works should be the conclusion of BR 163 — which agribusiness wants ready quickly because it is the main route of disposal of the Central West crop — and the concession of railroads that can connect to ports, in the case of the North-South Railroad, Fiol, Ferrogrão, and Fico.
The interconnection of modes of transport will take priority. It even studies until the creation of a regulatory agency to take care of the manners. Railways that stay in ports, for example, would be regulated by that agency.
A round of airport sales should also be announced by the new government.
Also at the administrative level, the cut of at least 20% of the commissioned posts is under discussion. Deputy Onyx Lorenzoni (DEM-RS), who was already announced as head of the Civil House and will coordinate the transition team, went so far as to say that all 23,000 positions will be extinguished. What is being discussed is the “promotion” of career servants to trusted posts if there are cuts.
The measure, however, will be reviewed with caution because several departments in federal agencies today operate under the command of officials who did not tender.
Reform of Social Security
For a positive signal to the market, at least one of the structuring reforms will be announced. Probably, it will be Social Security. Initially, it was considered to forward the version sent to Congress by Michel Temer, but Bolsonaro himself said he prefers his own reform.
At least two are being evaluated: one by brothers Abraham and Arthur Weintraub, both professors at the Federal University of Sao Paulo, who have collaborated with Bolsonaro since before the campaign, and the former president of the Central Bank Arminio Fraga.
Both will promote a radical change in the pension system. One provides for the migration of current plans to capitalization accounts, with a transition funded by a fund. The proposal of Armínio Fraga works with the coexistence of both systems.
In capitalization, each taxpayer saves for his or her own retirement. This proposal, however, violates constitutional principles. According to specialized lawyers, the Social Security must be financed by all taxpayers. To change this principle, approval of at least two-thirds of Congress will be required.
What is being discussed in Bolsonaro’s team right now is whether it would be better to start with a more lenient change, adopting Temer’s reform, until the pulse of the new composition of Congress for a more radical change is taken.