The government of Brazilian President Jair Bolsonaro announced Tuesday a financial package aimed at staving off a potential truckers’ strike.
Chief of Staff Onyx Lorenzoni said the Brazilian Development Bank will be providing $128 million in credit to truckers and that the Ministry of Infrastructure will spend $514 million on improving roads.
The announcement is part of a series of recent decisions by the administration 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.
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 Tuesday that 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 been something that has long been contentious for truckers since the decision was made to peg its price to the international market. In the previous two governments, the administration had 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 with the international market it led to a disastrous combination of inflation during 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.
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