Remarks by President of the Republic Michel Temer at the Plenary Session of the World Economic Forum
Davos, 24 January 2018
Mr. Klaus Schwab,
Ladies and gentlemen,
I bring to you a clear message: Brazil is back. And the Brazil that is back is a more prosperous country, a more open country, a country of more opportunities for investment, commerce and business.
After the biggest recession we have ever faced, Brazil is growing again. Inflation, which reached double digits, closed 2017 once again under control, at less than 3%. Interest rates are falling steadily, reaching their lowest level ever. State-owned companies, which had faced billions in losses, now have significant profits. Our agricultural harvest has hit record highs. Our trade balance recorded in 2017 a surplus of more than 60 billion dollars. Also in 2017, by November, our net foreign direct investment inflows totalled 64 billion dollars. Brazil's country risk has consistently fallen - from more than 500 points in January 2016 to 200 points.
All this we achieved in just one year and eight months of my administration. In this short period, we transformed Brazil. We carried out a broad agenda of reforms to modernise the economy, the business environment, the labour market, public management, and the management of State-owned Enterprises. A reform agenda that is recognised as the most comprehensive implemented in Brazil in a long time.
There are five words that help summarise this agenda - and explain the new Brazil that emerges from the reforms. These are words that express principles and objectives that have guided us in this historical crossing we are undertaking.
The first word is responsibility. In dealing with the crisis we inherited, we rejected, from the outset, false populist shortcuts. It was imperative to govern with a long-term vision. Our diagnosis was and is unequivocal: populism had left us with a serious crisis of fiscal origins - and only responsibility could take us out of it. For it is so, with responsibility, that we have acted. We ensured full transparency to the public budget, disclosing, without reservation, what the country's fiscal situation was. We approved an amendment to the Constitution that established a ceiling for government spending over the next 20 years. It is a measure that ensures the rebalancing of the public budget. As a result of our adjustment efforts, we had, in 2017, a primary fiscal deficit well below the target, well below expectations. And our responsibility, of course, is not only with the public budget: it is also a social one. They are two sides of the same coin: without fiscal responsibility, social responsibility is merely empty words. Only with our accounts in order can we have growth and employment; only with our accounts in order can we have room in the budget for social policies that are indispensable in a country that is still unequal such as ours.
The second key word in our agenda is dialogue. In politics, in life in general, little can be achieved alone - even less so overcoming obstacles of the size of those we encounter. It was necessary to join forces. Previously worn out, the relations between the Executive Branch and National Congress were rebuilt and the Legislative, as it should be in democracies, became the protagonist of the collective work that is the rebuilding of Brazil. To fulfill our mission, we must know how to listen, we must know how to persuade, we must know how to aggregate, without intransigence. Thus, we have earned the necessary political support for the changes we are promoting.
The third word is efficiency. We have adopted crucial reforms to improve productivity in the economy, to increase the competitiveness of Brazilian products. With labour reform, we brought our labour legislation, conceived almost 80 years ago, into the 21st century. Work modalities typical of modern times now have clear legal provisions, protecting workers and giving legal certainty to employers. We also reformed our educational system - particularly secondary education. We replaced an anachronistic model that established standardised and outdated curricula with another one, more connected to the labour market and which allows each young woman and man to pursue their vocation from an early age. In the same way, we engaged the entire public administration in an intense effort to improve the business environment. We are debureaucratising the country: dozens of procedures have already been eliminated or simplified, all to make it easier to import and export, open and close a business. We are automating records and computerising tax and customs processes - because the time of entrepreneurs is too valuable to be spent in queues or counters.
Our fourth keyword is rationality. Investors will find in Brazil today a country with a legal framework that is based on the reality of the market. A country that knows that the State cannot and should not do everything. We have adopted a realistic model of concessions and privatisations, with a secure and stable regulatory framework. In just a year and a half, 70 major projects were tendered to the private sector - and 75 more will be tendered in 2018. These are ports, airports, highways, railways, power transmission lines, and gas and oil fields that offer great opportunities to national and foreign companies. Similarly, we have strengthened the autonomy of regulatory agencies, ensuring that they act technically and independently. We approved a new State-Owned Enterprise Law that guarantees professionalism in the management of Brazil's large public companies. We have instituted objective rules for the oil and gas sector, which freed the State from being required to participate, through Petrobras, in all pre-salt exploration activities.
Last but not least, we are guided by openness. We live in a world of isolationist tendencies. We know, however, that protectionism is no solution. When we close ourselves, we close ourselves to new technologies, new ideas, new possibilities. We close ourselves to effective solutions to common problems. Our government has been working to increasingly integrate Brazil into the global economy. Together with our partners in Mercosur, we restored the bloc's original vocation for the free market. We have identified barriers to trade and are trying to eliminate them. Also in Mercosur, we signed investment agreements, and, more recently, an agreement on government purchases. We are approaching the Pacific Alliance countries. We have opened new trade negotiations with countries such as Canada, South Korea and Singapore. And, for the first time in twenty years, we have a realistic perspective of concluding the Mercosur-European Union agreement - an agreement that we want to be comprehensive and balanced. The Brazilian government has also requested access to the OECD - an organisation of which we are a key partner and whose normative framework is already widely compatible with Brazilian legislation. At the multilateral level, Brazil has defended a rules-based trading system and promoting the role of the WTO and its dispute settlement body. Just as it has honoured the Paris Agreement on Climate Change. In fact, nothing more natural for a country like Brazil, which has the largest tropical forest cover on the planet, which has one of the cleanest energy grids in the world and which can be an agricultural powerhouse using less than 8% of its territory for it.
In short, this is the new Brazil that we can present today. The Brazil of responsibility, not populist. Of dialogue, not intransigence. Efficiency, not bureaucracy. Rationality, not unrealism. Openness, not isolationism.
Ladies and gentlemen,
I know that many may be wondering if we will continue on this path; if our journey would not be threatened by the coming elections in Brazil. Let me tell you, bluntly and with conviction: we will complete our journey.
The Brazil that will go to the polls in October knows that responsibility creates results. It brings balance to the public budget, growth and jobs. It makes social policies viable. Today, the main analysts of Brazil, political and economic analysts alike, agree that there is no alternative to the agenda of reforms that we are promoting. The space for coming back is now virtually non-existent.
Our next step is to fix the pension system, a task we are fully committed to. Increasingly, the Brazilian population realises that the current system is unjust and unsustainable. We will fight, day and night, vote to vote, to approve the bill now in Congress. Our reforms, it should be noted, have been adopted with very strong majorities in parliament.
And our agenda does not end with pension reform. By the end of the year, we also want to promote the simplification of our tax system, aiming to make the lives of entrepreneur, workers and Brazilian citizens in general easier.
Ladies and gentlemen,
Our country emerged stronger from the crisis, and has returned to the path of development. Now that the big economies are growing simultaneously, we are giving - and will improve - our contribution to this process. Brazil is back - and we invite everyone to be part of this new moment in our history.
Thank you very much.