May 28, 2018 / 6:02 PM / 5 months ago

Advisor to right-wing Brazil candidate says privatize it all

RIO DE JANEIRO, May 28 (Reuters) - Brazil should privatize everything from lender Banco do Brasil to oil company Petróleo Brasileiro SA, the main economic adviser to leading presidential candidate Jair Bolsonaro told Reuters, underscoring the far-right congressman's overtures to the business community.

Investment banker Paulo Guedes, currently a partner at investment firm Bozano Investimentos Ltda, said asset sales could help the federal administration cut debt and fund cash-hungry local governments.

"Sell it all," he said in a late Friday interview at his office in Rio de Janeiro. "Privatizing cautiously, bashfully, just won't do."

His remarks contrast with previous statements by Bolsonaro, a former army captain who has led early presidential polls excluding jailed former President Luiz Inacio Lula da Silva.

Bolsonaro himself has praised the nationalist, state-driven economic policies of Brazil's military government in the 1970s.

Guedes shrugged off Bolsonaro's contradictory remarks on economic policy, saying other politicians did not get the same scrutiny for changing their minds.

"If he came looking for me, he does not defend that anymore. I am where I've always been, my ideas have been the same for 30 years," said Guedes, who holds a PhD from the University of Chicago.

Privatizing all state firms would raise around 800 billion reais ($215 billion), he said — enough to reduce federal debt by a fifth.

That agenda would make Bolsonaro the most prominent of a group of candidates marrying conservative social positions to supply-side economics as Brazil heads to its most hard-to-predict presidential election in decades.

Bolsonaro has often been a focus of controversy due to aggressive comments about women, homosexuals and racial minorities, while defending Brazil's military government. Yet his law-and-order rhetoric and plans to ease gun controls have resonated with many voters, especially in Brazil's booming farm country.

The unpopular President Michel Temer, who pursued privatizations but struggled to close a gaping budget deficit as corruption charges weakened his hand in Congress, has scrapped plans to run for re-election.

The field is now split among a wide range of candidates looking to fill the void left by the bribery conviction against leftist leader Lula, who had been consistently leading ballots.

Guedes said he supported some of the reforms implemented by Temer, such as a constitutional amendment limiting growth of public spending and a higher interest rate for subsidized loans from state development bank BNDES.

He also defended a far more ambitious tax reform than Temer had put forward, proposing a single, value-added federal tax to replace Brazil's notoriously complicated tax system.

$1 = 3.71 reais Reporting by Marcela Ayres; Writing by Bruno Federowski in Brasília Editing by Nick Zieminski

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