March 5, 2020 / 2:12 PM / a month ago

UPDATE 1-Brazil's low growth 'not normal,' keeps Treasury secretary from sleeping soundly

(Adds detail, quotes)

By Marcela Ayres

BRASILIA, March 5 (Reuters) - Brazil’s economy is experiencing severe difficulties, Treasury Secretary Mansueto Almeida said on Thursday, adding that its low growth is not normal for a developing country and is keeping him from sleeping soundly at night.

The economy’s weakness is the source of growing frustration across all segments of society, but the best way to boost confidence and activity is to press ahead with the government’s reform agenda, he said.

“As a country, we are experiencing enormous difficulties. I do not sleep soundly, I am very concerned, we still have very low growth,” Almeida said at an event in Brasilia, a day after figures showed that the economy grew 1.1% last year, the slowest in three years.

Echoing reaction from Economy Ministry officials to Wednesday’s gross domestic product figures, Almeida doubled down on the need to get the public accounts in order and implement the government’s wider reform agenda.

Almeida said the political will in Brasilia to pass major reforms across a wide range of areas including public sector, taxes, and central bank independence, is strong, even though the process may be slower than he would like.

“Some people say: ‘but Congress is dragging its heels.’ Congress is not dragging its heels, Congress debates, Congress has its ways, Congress has its timetable,” Almeida said.

Although “everyone” supports fiscal discipline, Almeida said, the government must still find a way to increase public investment, particularly in education. Balancing the books is the best way to create the fiscal space to provide public services and increase public investment, he insisted.

Local media on Wednesday reported influential lower house speaker Rodrigo Maia criticizing the government’s fiscal policy, saying that the country will suffer if all the government does is “cut, cut, cut.”

Almeida noted that it is not normal for Brazil, with a tax burden close to 34% of GDP, to have public investment equivalent to less than 2.5% of the public sector. But he warned that if tax receipts fall short of expectations, then the government will have to implement more spending freezes. (Reporting by Marcela Ayres Editing by Peter Graff and Steve Orlofsky Writing by Jamie McGeever)

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