This Sunday (27), Samuel Pessôa, researcher at the Brazilian Institute of Economics at FGV and head of Economic Research at the Julius Baer Family Office, spoke to CNN Brazil on the economic scenario in the country.
According to him, the most important topic being discussed now is the fiscal imbalance, since Brazil has been experiencing this problem since 2015.
“The National Congress established expenditures for the government, and simultaneously, Congress itself established sources of revenue. Those two things don’t talk,” he pointed out.
Pessôa said that the Brazilian state lives in a permanent fiscal deficit. That is, it cannot sustain itself and put the public debt on a sustainable path. “This problem was very serious in 2015, as it represented something like 5% or 6% of GDP. Today it is between 2% and 2.5% ”, he says.
“There was a lot of strangulation with the spending ceiling, the pressure groups managed to save themselves, as is the case with the secret budget, which nobody takes the money from, but this fiscal adjustment process that has been going on since 2015 affects the most diffuse interests of the society,” he points out.
The researcher also claims that the government did not give a real increase to the minimum wage for many years and several public policies had their budget greatly reduced. “Then there is an end of the government cycle with an immense demand for these public policies to recover their reduced resources”.
The problem, according to Pessôa, is that the current government’s proposal does not intend to review the budget, line by line, and analyze where to spend less and where to spend more. “The new government wants to spend more permanently. The first proposal that President Lula and the PT group sent was almost 2 pp [a mais] of GDP in public spending for 4 years”, he points out.
“President Lula would like to assume [seu mandato] with a tax hole of 4% to 4.5%. The problem is that the National Congress is in solidarity with the executive when it comes to kindness. If he asks for public spending, he gives public spending, because nobody is upset about spending more”.
Check out the full interview above.
Source: CNN Brasil
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