The Brazilian government announced this afternoon, as reported by the State, a contingency in the 2016 budget in the amount of R$23,408 billion, the lowest contingency amount since 2010. If the intention was, as the news insinuates, to show the effort made to reduce expenses and carry out the fiscal adjustment, an analysis, even if superficial, throws this claim “down the water”.
Firstly, the contingent amount is very low for the size of the drop in revenue predicted by the government itself when assuming a retraction close to 3% in the economy for this year. Just for comparison purposes, at the beginning of 2015, the announcement of contingency was R$69,9 billion. It should be remembered that since then, the economic scenario has deteriorated significantly and government revenue has plummeted. Thus, a much greater effort to cut costs was to be expected.
When we look at the number from the inside, the government's “make-believe” becomes more evident! A substantial part of the cuts will occur on projects that would not happen at all. Let's take the example of the PAC: since its announcement, as an electoral platform for the then Minister Dilma for the presidency of the republic, promising to unlock the national infrastructure, most of the announced investments have not been carried out. The announcement says that this program will suffer a cut of R$4,2 billion. It doesn't seem to be for real! Cut off from what would not occur?
If it were, it would still be a mistake, as the contingency, especially in periods of economic crisis, must be made on top of current expenses, such as expenses with personnel and third parties, bonuses, advertising and short-term investments. Long-term investments, such as those in PAC infrastructure, must be preserved to make it possible to overcome the crisis with greater speed and prepare the country for more robust growth in the future.
The drop in demand, and consequently in the volumes handled, unfortunately momentarily takes the pressure off part of the transport infrastructure in Brazil. On the other hand, currency devaluation, strengthening exporting companies, will put more pressure on some roads, port accesses, ports and airports. Once again, the option will be for shorter-term projects that favor the electoral intentions of the rulers, to the detriment of long-term investments that could change the reality of transport infrastructure in Brazil.
Good luck for all of us!
Leonardo Julianelli
https://ilos.com.brExecutive Partner of ILOS. Graduated in Production Engineering from EE/UFRJ, Master in Business Administration from COPPEAD/UFRJ with extension at EM Lyon, France, and PhD in Production Engineering from COPPE/UFRJ. He has several articles published in periodicals and specialized magazines, being one of the authors of the book: “Sales Forecast: Organizational Processes & Qualitative and Quantitative Methods”. His research areas are: Demand Planning, Customer Service in the Logistics Process and Operations Planning. He worked for 8 years at CEL-COPPEAD / UFRJ, helping to organize the Logistics Teaching area. In consultancy, he carried out several projects in the logistics area, such as Diagnosis and Master Plan, Sales Forecast, Inventory Management, Demand Planning and Training Plan in companies such as Abbott, Braskem, Nitriflex, Petrobras, Promon IP, Vale, Natura, Jequití, among others. As a professor, he taught classes at companies such as Coca-Cola, Souza Cruz, ThyssenKrupp, Votorantim, Carrefour, Petrobras, Vale, Via Varejo, Furukawa, Monsanto, Natura, Ambev, BR Distribuidora, ABM, International Paper, Pepsico, Boehringer, Metrô Rio , Novelis, Sony, GVT, SBF, Silimed, Bettanin, Caramuru, CSN, Libra, Schlumberger, Schneider, FCA, Boticário, Usiminas, Bayer, ESG, Kimberly Clark and Transpetro, among others.
