Analysts: ‘Pandora Papers’ revelations will make Brazil’s already precarious economy even more unstable

Last week, more than a thousand housing activists marched in Brasilia, the capital of Brazil, and occupied the entrance to the country’s finance ministry.

Videos from the protest show a sea of ​​people wearing red and yellow shirts with badges signaling their housing moves and chanting in front of a row of military police. It was one of many related protests last week.

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In Brazil, revelations from the “Pandora Papers” – a wealth of leaked documents that exposed the offshore accounts of the rich and powerful – rocked the government of President Jair Bolsonaro, with calls for the resignation of some of its senior officials.

This includes Finance Minister Paulo Guedes, who, along with his family, held $ 9.55 million in offshore accounts in the British Virgin Islands.

Some people blame him for getting rich from the devaluation of the Brazilian real, as inflation and gas and electricity prices skyrocket and the real estate market collapses.

In 2018, 33 million Brazilians were either homeless or poorly housed, according to the UN. Experts say the situation has escalated amid the pandemic.

A plethora of housing programs – including the construction of social housing, and loans and credits for low-income families and communities – were largely frozen under the Bolsonaro government.

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At least 14,300 families were evicted from March 2020 to June 2021 across the country, while 85,000 others are threatened with eviction, according to the organization Zero Evictions (Despejo Zero).

“We have seen more and more families losing their homes,” said Evaniza Rodrigues, president of the National Union for Popular Housing, one of the organizers of the demonstration. “We have seen more evictions. People have lost their jobs and their ability to pay rent.

“This is why we protested to the Ministry of Finance. Paulo Guedes had millions of dollars in tax havens as he cut resources for housing and social policies in Brazil.

Dito Barbosa, lawyer of the Union of Housing Movements of São Paulo

“This is why we protested to the Ministry of Finance,” said Dito Barbosa, an attorney for the Union of Housing Movements in São Paulo. “Paulo Guedes had millions of dollars in tax havens as he cut resources for housing and social policies in Brazil.”

Guedes and his family have reportedly earned nearly $ 3 million in offshore accounts since becoming finance minister in 2019. The Brazilian currency has lost nearly 40% of its value against the dollar since then.

The Pandora Papers also named two other Bolsonaro allies, including Brazil’s central bank chief Roberto Campos Neto and department store mogul Luciano Hang.

Hang recently testified before Congress amid allegations he helped fund a pro-Bolsonaro fake news program and pushed the unproven drug hydroxychloroquine for use against COVID-19.

Allegations against the country’s top financial officials rock Bolsonaro’s government.

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“There is a conflict of interest,” said economist Lauro Mattei, professor at the Federal University of Santa Catarina. “Mainly, because these are the people who oversee the country’s financial policies. And they can anticipate the benefits or make decisions that may be beneficial to themselves. “

Guedes says his offshore accounts are legal. But many are now asking for his resignation and that of Campos Neto.

Among them is Eduardo Moreira, a former investment banker who denounced Guedes in a video he posted on social media that was reportedly shared among key members of Bolsonaro’s government.

“You talk about someone who is responsible for the economy of a country, and he doesn’t want to pay taxes there and runs away. It’s absurd.”

Eduardo Moreira, former investment banker

“You talk about someone who is responsible for the economy of a country, and he doesn’t want to pay taxes there and runs away. It’s absurd, ”Moreira said.

Guedes is a big name in the Bolsonaro government and a bit of an icon for libertarians and conservatives in Brazil. He was one of the so-called Chicago Boys, a group of young Chilean economists who studied free market policies under the direction of Nobel laureate Milton Friedman at the University of Chicago in the 1970s. Guedes then went on to worked in Chile under dictator Augusto Pinochet before founding Latin America’s largest investment bank.

Under Bolsonaro, he was pushed to implement a wave of privatizations that would upset the Brazilian state.

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“We have concessions and privatizations in infrastructure, natural gas, oil, electricity, water and wastewater,” he said in a meeting with the Brazil-States Business Council. -United last year. “We approve of all these regulatory frameworks[s] to open the border to new investments.

But this investment did not happen. And Brazil’s economy is not doing well.

“The Pandora Papers revelations will generate more instability in an economic system that is already really precarious,” said Mattei, the economist. “To moo [gross domestic product], lack of investment, rising unemployment, hunger and poverty, and the return of inflation. These revelations will add fuel to the fire and make Brazil’s macroeconomic environment even more unstable.

The Lower House and Senate of Brazil have called for hearings with Guedes and Campos Neto. It is not known if there is enough political pressure to force them to leave.

It’s just a new political crisis for Bolsonaro, whose rejection rate is at its highest since the start of his presidency, one year before the 2022 elections.



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