Brazil's fiscal incontinence is legendary. But one state has managed to buck the trend
in Espírito Santo, a state of 4m people on the coast of south-eastern Brazil, is lighter than the fish stew in Bahia, its neighbour to the north, explains a tuxedoed waiter in the capital, Vitória. Capixabas, as Espírito Santo residents are called, like it that way. Their beaches are smaller than those of Rio de Janeiro, to the south; their colonial towns plainer than those of Minas Gerais, to the west.
Under Dilma Rousseff, Brazil’s president from 2011 to 2015, states like Rio de Janeiro depended on treasury-guaranteed loans from state banks to keep spending. But Brazil’s new president, Jair Bolsonaro, has promised to reduce the size of the state. His treasury head, Mansueto Almeida, has made debt relief conditional on efforts to comply with a fiscal-responsibility law—passed in 2000 but long ignored—that restricts spending on personnel.
Finally, Espírito Santo was better placed to downsize. Its bureaucracy includes a large share of temporary workers, including roughly 60% of teachers. Unlike civil servants, they can be fired. Mr Hartung eliminated more than 7,000 positions, or roughly 12% of the bureaucracy. In Rio de Janeiro less than 3% of government workers are temporary.
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