135 2015 By Diego Machado, infrastructure and logistics Manager for Parallax President Dilma’s second term surprised everyone with the adoption of economic policies antagonistic to her reelection speech and policies implemented in her first presidential term. Among changes in the management of the economy of this new term, there have been discussions on the need to implement the so-called “fiscal adjustment” of the Brazilian economy carried forward by the new economic team of the government. The adjustment in the fiscal policy was necessary due the deterioration of the public accounts of the country, primarily expressed by gross debt increase at levels above its international peers. However, the goal of the Government is that this should stabilize and start to recede from 2016. Among the measures adopted by the Government, its intention is to achieve a primary surplus of 1.2% of GDP in 2015 and 2.0% in 2016. To achieve such fiscal targets, Government initially does not intend to create new taxes, but to remodel the collection through the readjustment of existing tax rates and to “tighten the belts” of the Government’s discretionary expenses. Regarding the Government’s plan to contain the systematic advancement of inflation, along with greater fiscal austerity, a contractionary monetary policy is being implemented, affecting the purchasing power of the population by increasing the benchmark interest rate and adjusting administered prices, mainly fuel and electric power, which once were frozen and now are an important part of the adjustment of relative prices in progress. The effects of these monetary tight fiscal policies can already be seen, especially in the reduction of government investments and disbursements through the public banks, especially BNDES. Despite all these notes, little has been discussed about the effects of such austerity measures on the economy. These measures create a scenario of economic instability that is already reflected in business community confidence indicators reaching levels as low as the ones hit in 2008 crisis, creating, therefore, an unclear environment for investments by private agents. When analyzing specifically the road equipment sector, some structural factors have created even greater barriers, affecting therefore the dynamics of this market. The strategic line of financing (read PSI/FINAME) changing conditions is among the points of greatest reverberation for the sector. The PSI/FINAME has a great importance for the growth and support of the road implement sector, since it accounts for up to 80% of total sales. This high dependency occurs due to the rates and terms subsidized by the Government, making them more attractive when compared to financing through private financial market agents. Such dependence associated with the economic policy adopted by the Government makes any changes to its structure bring eminent risks and negative expectations for the supply chain sector. It means that even the deadline for disclosure of such conditions affects entrepreneur’s decision. The later this happens, the less reaction time the market has to organize itself and, if necessary, to seek out new alternatives. In a recent case, the (PSI/FINAME) financing conditions were disclosed in the last fortnight of December 2014, and with a non-optimistic content. Through this new composition, growth expectations of road equipment industry for 2015 were put in check. The main changes consist of: i) increase of interest rates from 6% to 10%; II) reduction of financing part from 90% to 50% (large companies) and 100% to 70% (small and medium-sized companies); and iii) decrease of financing term from 120 to 72 months. These changes have caused industry instability and concern for the industry and entrepreneurs who planned to use PSI/FINAME to renew or expand their fleet. Thus, the prospect for the Effects of the Economic Policy
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