RIO DE JANEIRO >> The government of Brazilian President Jair Bolsonaro announced today a financial package aimed at staving off a potential truckers’ strike.
Brazilian Development Bank will be providing $128 million in credit to truckers and the Ministry of Infrastructure will spend $514 million on improving roads, said Chief of Staff Onyx Lorenzoni. The announcement is part of a series of recent government decisions aimed at appeasing the sector.
Last month Bolsonaro announced via Twitter that he would not be renewing a contract for electronic radars saying that “the vast majority of them only exist for the sole purpose of financial return for the state.” An investigation by newspaper Folha de Sao Paulo found that the radars had resulted in a 21.7% reduction in fatalities on federal roads.
On Thursday, Bolsonaro canceled a planned 5.7% increase in diesel prices. The decision caused shares in Brazil’s state oil company Petrobras to drop more than 13%, with many investors fearing that it could signal a more interventionist strategy by the president similar to previous governments.
Onyx said the independence of Petrobras has not been jeopardized by Bolsonaro’s decision. “The government has always said that Petrobras will have the autonomy and authority to execute that which is necessary regarding fuel policy.”
Following Bolsonaro’s step back on the price increase last week, several ministers from his government convened Monday evening to find ways to help the truckers without interfering in the price of oil.
Bolsonaro ran on a platform championing the freedom of the market and criticizing his predecessors from Brazil’s Workers’ Party for their “incompetence.”
His decision to cancel the announced price hike received uncommon support from impeached President Dilma Rousseff of the Workers’ Party who Tweeted Sunday that “the management of the largest Brazilian public company cannot be subjected to the short-term logic of financial speculation.”
Mauricio Santoro, a political scientist at the State University of Rio de Janeiro, told the Associated Press the decision by Bolsonaro to intervene on behalf of the truckers has left investors worried.
“From an economic perspective, the Dilma government should have been an example of what to avoid, but it is very impressive that Bolsonaro hasn’t learned from her errors,” he said.
The cost of fuel has long been contentious for truckers since the decision was made to peg its price to the international market. In the previous two governments, officials dictated the price of oil in order to control inflation. This strategy resulted in massive expenditures by the state. Following the economic recession, the ability of the government to subsidize the losses was no longer viable, and when the government floated the commodity in the international market it led to a disastrous combination of inflation amid a recession.
A truckers’ strike last year caused a national crisis that had an estimated economic impact of $7.7 billion and led to shortages of food, medicine and petrol. Nearly 70% of all goods are transported via highway. The truckers blocked roads and refused to work until their demands for a reduction in the price of oil were answered.
Bolsonaro’s infrastructure minister Tarcísio Gomes de Freitas said the concessions are merited.
“It’s not about the government being held hostage. The truckers are just asking for the conditions to work. It is only fair to establish a dialogue,” he said.