Country needs social spending and the market betting on the economy, says economist

To ensure solid and consistent growth over the years, President-elect Luiz Inácio Lula da Silva (PT) needs to combine, in the most harmonious way possible, his plans to increase social spending with the confidence of the financial market, in the opinion of Juliana Inhazs, coordinator degree in Economics at Insper.

“We need to grow and, for that, we have to have not only social spending, but also the market betting on the economy. It is a huge challenge for the squid”, said the economist this Saturday in an interview with CNN.

Financial market agents have expressed concerns about the lack of definition in the elected government’s plan to accommodate a series of expenses outside the constitutional ceiling that limits the evolution of expenses.

“The Transitional PEC is already a reality, people understand that it is necessary, especially since the elected government made clear during the campaign the evident need to accommodate more spending in the budget, especially at the beginning of the mandate. The big question is where the money will come from, because this is not trivial”, he says.

The economist explains that clearer signs are lacking that this plan to increase spending may find some fiscal balance ahead, especially with regard to the public debt, a major point of concern for the market.

“A strong name for important ministries, such as Casa Civil and Treasury, would calm this market. It is important that we have names that convey credibility, so that this market can understand that it is giving a blank check to the new government, but with the certainty that it will be well used”, he says.

“Lula has a big challenge ahead of him, not only in this transition period, but at the beginning of his term, which is to manage to pass the reins in this market and avoid obstacles to his governance, especially in the first months”.

See the full interview above.

*Produced by Elis Franco, CNN / published by Ligia Tuon