Brazil’s Austerity Plan Alone Won’t Fix The Economy According To BMG Bank President Ricardo Guimarães

It’s no secret. Brazil’s credit rating has been downgraded, and it may happen again. It’s also no secret that most people want President Dilma Rousseff to resign. The Working Party leader was popular when she took office, but several mistakes in judgment and nagging corruption issues have tainted her record and ruined her credibility. The country has been in a recession for the last two years, and it looks like it will continue next year. Rousseff has offered an austerity plan that basically cuts spending and raises taxes, but according to BMG Bank President Ricardo Guimarães that won’t be enough to pull Brazil out of these devastating economic times.
Guimarães told R7.com that Rousseff’s austerity plan is not Brazil’s ticket out of a recession. China buying power, or lack of it, has a lot to do with the recession. Brazilian exports have been carrying the economy for the last nine years, but oil and commodity prices have put a dent in the export business. Ricardo also mentioned the fact that the government has to make it easier for companies to do business in Brazil. The complicated tax system and the outdated pension system need to be overhauled as well.
Even though there will be a budget deficit in 2016, Guimarães and his family owned bank will still sponsor Brazilian soccer teams in 2016. BMG Bank spends millions on soccer sponsorships, and the bank plans to spend more in 2016. The reason for the increase is simple. Bank profits from the exposure that soccer gives the bank are skyrocketing. The small, but formidable, BMG Bank is outperforming its competitors in the consignment credit industry even though inflation is more than 10 percent a year, and interest rates are the highest they have been in decades.

Mr. Guimarães is a mining entrepreneur with a vision. He wants to turn his family owned bank into one of the most respected banks in the industry. Ricardo was recently interviewed by R7.com, and he said that the research firm Endeavor, along with the British research firm Meta, did a study on Brazilian entrepreneurs. The study discovered that most Brazilian entrepreneurs are not as proactive as they should be especially during a recession. Almost all entrepreneurs have dreams, expectations, big ideas and enough creativity to help pull the country out of the recession, but they are not proactive enough to get the job done, according to the study.

The banker also said that members of the administration suffer from the same issue, and that is another major reason Brazil is stuck in a financial conundrum. The people that know Guimarães know that he doesn’t fall into the lack of reactiveness category. His record speaks for itself.

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