Impact on the market if PEC dos Precatório is approved should be smaller, says ex-BC

In an interview with CNN, economist and former director of the Central Bank (BC) Alexandre Schwartsman stated that a possible approval of the PEC dos Precatórios in the second round in the Chamber of Deputies should have a smaller impact on the financial market.

“There is all the uncertainty of the second round, but the impact will be smaller. Negative, no doubt, but in general the market has already agreed that this should be approved. The reaction should be negative, but modest.”

Voting is scheduled for this Tuesday (9).

For Schwartsman, what should not be done “is to try another spending rule or other fiscal rules, as it has become clear in recent years that we only create rules to be able to break them afterwards. I would have to make a deal that would be the ultimate goal of the spending ceiling. Which was created because the idea was that if a limit were placed on spending, it would eventually force the Executive and the political world to deal with the issue of persistent expansion with mandatory spending in Brazil, which, to a large extent, was Social Security. – and it didn’t stop being even after the reform.”

The solution to this, according to the economist, would be via administrative reform that actually limited the expansion of spending on civil servants. “We don’t need Brazil to reinvent the wheel. It’s all relatively simple in terms of economic formulation, the political issue is that it’s infinitely more complicated.”

The economist also highlighted that there is still hope on the part of people in the market that the proposal does not go ahead due to the preliminary decision of the Minister Rosa Weber, of the Federal Supreme Court (STF), in the action that deals with the suspension of the execution of the resources of the amendments of rapporteur.

Regarding Weber’s decision, the president of the Chamber of Deputies, Arthur Lira (PP-AL), asked the STF ministers for a revocation and wants that the payments of amendments to the rapporteur remain in effect until the judgment of the actions.