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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Finance Minister Henrique Meirelles was in Washington D.C. on Thursday (October 12th) and said Brazil has the potential to grow by four percent per year – in the next three to four years – if the much-needed economic reforms are approved by Congress.

Brazil,Finance Minister Henrique Meirelles says reforms must approved for country to grow,
Finance Minister Henrique Meirelles says reforms must approved for country to grow, photo by Gustavo Raneire/MF.

“It is an optimistic scenario, but a possible one,” Meirelles told reporters. “Our growth expectations are being reviewed by economic analysts every day,” he said.

If these reforms are not approved, however, the government will have to more drastic measures to reduce its spending and comply with the targets established for the budget.

“If the necessary reforms are not approved and at some point the budget and public expenditure violates the (budget) ceiling rule, the mechanisms are self-correcting. There is, then, the cut of new tax exemptions, subsidies, halt of any government hiring or increase in wages,” he concluded.

The main reform waiting to be approved by Brazil’s Congress is the highly controversial social security reform, which calls, among other things, for the increase of the minimum retirement age to 65 years for men and women, with a minimum contribution of 25 years.

Opposition lawmakers and labor unions oppose the reform stating that it violates acquired rights of workers and large demonstrations have been held against the reform in Brazil’s major cities this year.

“Social security reform is a matter of interest or should be the interest of various political factions, because even if it is not approved now, it will have to be discussed and approved by the next government,” rebuked Meirelles.

In 2016, the deficit in the country’s public social security accounts totaled R$149.7 billion. The government estimates that this year, the deficit will jump to R$188.8 billion and, in 2018, to R$202 billion.

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