Privatization

Temer administration announces devastating $14 Billion privatization campaign

The recent announcement takes place as the Brazilian government continues its aggressive pursuit of austerity

Brasil de Fato | São Paulo (SP)

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The current Brazilian government announces massive privatization campaign, with plans to sell off everything from the mint to the airports / Fotos Públicas

Brazil’s federal government announced last week a plan to privatize 57 publicly held assets, which would include the privatization of 14 airports, 11 electric transmission lines, 15 port terminals and the Brazilian Mint (CMB).

The Temer administration proposed a measure that seeks to privatize the country’s 323-year-old “Casa de Moeda”, which administers the country’s national currency and passports for Brazilian citizens. 

Many Brazilians perceive the public institution as a symbol of the country’s sovereignty. Some argue that it’s also a matter of national security to have the state print its own money. 

“Brazil’s mint company plays a strategic role in the defense of national sovereignty. It would be a very risky decision to forfeit sensitive information of Brazilian citizens over to the hands of a private owners,” said Aluizio Junior, President of the of the mint’s union. 

The planned sale of the mint by year-end is particularly confusing since Brazil’s state-run mint operation has generated profits for the last 13 years. 

However, the Temer administration has defended the planned sale on the grounds that the CMB is incapable of sustaining profitably over the next five-ten years. The government claims that the increased use of personal credit cards by Brazilian consumers will decrease the need to produce future banknotes and coins.

However, for many economists and labor activists, the planned privatization measures fail to address the root cause of Brazil’s economic woes, which remains in recession, having shrunk 3.8 percent in 2015, and another 3.6 percent in 2016. 

Aluizio Junior, President of the CMB, argues that in general, in order to stimulate Gross Domestic Product (GDP), government spending should be positive during times of slow growth and neutral or negative during times of high growth.

The most recent announcement takes place as the Temer administration continues its aggressive pursuit of selling public assets without public consultation.

Last week, the Brazil’s ministry of mines, said it would also reduce its controlling stake in the power generation company Centrais Elétricas Brasileiras (Eletrobras).

Gilberto Cervinski, the coordinator of the Movement of Affected by Dams (MAB), expressed specific concerns regarding the government’s proposal to privatatiize of Electrobras. 

Cervinski warns that the initiative could lead to more expensive electricity bills and lower quality service, which he argues would disproportionately impact low-income and socially marginalized populations. 

“The current proposal will not lead  to new investments or help to expand the country’s electricity sector. They [private corporations] are trying to take ownership and profit from the existing infrastructure. We know that private capital does not invest money to build new public works projects. It is publicly owned companies that drive this process,” Cervinski added. 

These same sentiments were echoed in a recent report carried out by the Transnational Institute, which found that “privatization has proven to be unjust, costly and inefficient."

The 237 page report, titled, "Reclaiming Public Services" goes on to note that, "putting essential services back into public hands has time and again resulted in enhanced public revenue (Hamburg, Germany); a decrease in debts and network losses (Albania); and an increase in coverage and more affordable rates (Bolivia)." 

The proposed restructuring of Eletrobras is one of Brazil’s largest privatisation initiatives since the government auctioned mining company Vale and aircraft producer Embraer in the 1990s. 

Edição: Nate Singham (English Version)