Brazil's Bolsonaro pledges privatizations if re-elected; mum on Petrobras

Brazil's President Jair Bolsonaro speaks during a poultry and pork event in Sao Paulo, Brazil August 9, 2022. REUTERS/Carla Carniel

BRASILIA, Aug 10 (Reuters) - Brazil's President Jair Bolsonaro did not mention privatizing state-controlled oil company Petrobras (PETR4.SA) in his re-election plan released on Wednesday that promises to continue pursuing policies that reduce the size of the state.

"The government ... will proceed with reordering the state's role in the economy, through privatization and divestment of state-owned companies, to focus on state participation in essential activities and in promoting Brazil's economic, social and sustainable development," the plan said.

The document contrasts with his 2018 election plan that dedicated specific pages to Petrobras. The company was not even mentioned this time, despite Mines and Energy Ministry Adolfo Sachsida requesting its privatization be studied.

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Bolsonaro's 2018 plan defended Petrobras' policy of pegging domestic fuel prices to international rates, but with hedging mechanisms that smoothed out short-term fluctuations. According to the document, the company should also sell a "substantial" portion of its refining, retail and transportation units.

Leftist former president Luiz Inacio Lula da Silva, whose lead in the polls has been narrowing in the run-up to Brazil's October election, has spoken often his opposition to privatizing Petrobras. His advisers also recommended bolstering Petrobras' refining capacity, including through the reversal of refinery privatizations. read more

The presidential palace declined to comment and directed requests to Bolsonaro's Liberal Party (PL), which did not immediately respond.

Bolsonaro has become a vocal critic of Petrobras as fuel prices have risen, pushing Brazil's inflation rate into double digits. His complaints have decreased recently, after the company decided to lower fuel prices as oil prices have dropped.

Petrobras, whose president was replaced twice by Bolsonaro this year alone, also announced a leading industry dividend payout, which will boost the Treasury's fiscal result for this year.

In his new plan, Bolsonaro promised to maintain a monthly cash handout of 600 reais ($117.77) under Auxilio Brasil, a welfare program for the poorest families. He also restated a plan to increase income tax exemptions.

The document reaffirms the government's commitment to fiscal sustainability without mentioning how it intends to increase expenditures under a constitutionally mandated spending cap.

According to the plan, a second Bolsonaro term would proceed with plans to simplify the tax regime, lower taxes for companies and reduce import tariffs to foster trade.

($1 = 5.0947 reais)

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Reporting by Marcela Ayres; Editing by David Gregorio

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