Brazil needs to have a surplus of 2% of GDP to contain debt, says expert

In an interview with CNN this Friday (25th), the chairman of the board of directors of Jive and former director of the Central Bank, Luiz Fernando Figueiredo, assessed that the impact of the PEC of the Explosion would move away from the surplus target of 2% of GDP, a key number to reach the balance of the country’s accounts in relation to the public debt.

“Brazil today produces a surplus of 1% of GDP. In order for us to have a debt that doesn’t grow too much, that number would need to be 2%. When the government asks us to spend more, it is taking us away from that 2%, which is the balance of public accounts”, he explained.

“If it is a BRL 100 billion PEC, you are asking for the equivalent of 1% of GDP, which would already bring the country two percentage points below equilibrium. R$ 200 billion would decrease to three points. It is a very long distance, and what the new fiscal framework has to guarantee is a view that, at some point, we will reach balance.”

According to the former director of the Central Bank, the size of the PEC removes the prospect of when this balance of public accounts will be reached.

“Our debt is already very large and, in a little while, it will be unpayable. The question is how much the PEC moves away from this balance, which at some point needs to happen. BRL 200 billion is an excess.”

He also mentioned the need to pair fiscal responsibility with social responsibility, so that the country’s economic environment does not bring more problems than those that it wants to combat.