Lula and the PT want to repeal the privatization of Electrobras

Electrobras, the largest electricity company in Latin America, last week obtained $ 6.95 billion for the privatization of 30% of its shares, which means that the package of state-owned assets went from 70% to 40%. , with majority and control of the company in private hands.

This happened after receiving 3 times as many offers from the international financial system ($ 23 trillion) in relation to the finally accepted capital.

It implies it they have received more than 100,000 million dollars of private capital obtained in the privatizations of the last 3 yearsincluding national routes, airports and major ports, and first of all Santos, the largest pier in Brazil.

The historic success implied by the privatization of Electrobras occurred when the Morgan Stanley Latin American Asset Index (MSCI) rose 22% in the first five months of 2022; and the stock exchanges of Sao Paulo, Santiago, Lima and Bogotá increased their dollar assets between 19% and 30% over this period.

The capitals of the world turn to Latin American valuesand above all to those of the San Paolo Stock Exchange, which represents over 60% of the total stock markets of the continent.

Brazil is the world’s leading producer and exporter of soybeans, with a value of US $ 650 / ton just below the all-time record.

It is also the second largest seller of iron ore in the world, after Australia, and is the fourth largest oil market in the international market.

That is why its trade balance has accumulated a surplus of over $ 25 billion in the first four months of the yearwhich represents half of the positive balance of 2021.

At this rate, Brazil’s trade surplus would reach $ 110 billion in 2022, which is practically double the levels of 2021 ($ 61 billion).

all this is accompanied by a primary fiscal surplus which has been positive for over R $ 100,000 million in the past twelve months; and this happens for the third consecutive year.

Brazil got extraordinary macroeconomic equilibrium based on the soundness of its balance sheet accounts. This is a real historical novelty.

The structural reason for this remarkable phenomenon is that the country is experiencing the best terms of trade in its history (relative price of its exports vs. relative prices of its imports), with record values ​​of soy, wheat, corn, oil, and the iron ore, which triggered an extraordinary boom in tax collection, accompanied by a veritable mega trade surplus.

The consequence of this highly positive cycle is that the Central Bank’s reserve level exceeded $ 368 trillion in May this year, an all-time high.

What is surprising is that right now Lula and the Workers’ Party (PT) have made a huge strategic mistake by claiming that if they win the presidential election in October will cancel all privatizations carried out in the last 3 years by the government of Jair Bolsonaro and his Minister of Economy Paulo Guedes, starting with Electrobras.

Lula and the PT also stressed that they will repeal the constitutional reform that establishes a ceiling on public spending, and which was approved by a majority of over 70% of the two Houses of Congress just two years ago.

The success of the privatization process, and above all the resounding victory obtained with the sale of Electrobras, would be impossible without the prior approval of the public spending cap in 2020, which has become the main fiscal anchor in a country where spending power is constitutively higher than the willingness to pay; and in which the public debt has reached over 90% of GDP in the last 24 months.

The only thing that keeps the confidence of domestic and foreign capital to continue investing in Brazil is the full maintenance of the reform of the constitutional ceiling on public spending; and now Lula and the PT have promised to repeal this essential reform if they win the presidential election in October.

“History blinds those it wants to lose”, claimed the young Marx in the “Quaderni del Reno” of 1844; and the remarkable thing is that this apotegma of the founder of historical materialism has escaped the consideration of the most lucid minds of the PT such as Aloizio Mercadante and others.

The result of this notable omission is that the October presidential contest between Lula and Bolsonaro is now not only the most polarized in Brazilian history, with third-party candidates completely excluded, but also the PT’s terrible strategic error provided it with doctrinal supportreferring to the significance of the capital investment in the exclusive option of this year’s October elections.

There is a difference between 6 and 8 points according to the various polls in favor of Lula on Bolsonaro in the October elections, but the disparity is rapidly narrowing; and it is in this context that the privatization of Electrobras, the largest electricity company in Latin America, took place successfully.