It is better to create permanent expenses, but with a lower value, says economist on PEC

Contrary to the bulk of criticism of the Transition PEC, economist Marcos Mendes, professor and researcher at Insper, does not see much of a problem in the fact that the proposal to increase spending presented by the team of president-elect Luiz Inácio Lula da Silva is permanent, that is, create expenses that will continue to weigh on the budget in the following years, and not just on a temporary basis for 2023, as expected.

For Mendes, the main problem is the size and value of these proposals. The “PEC do Explosion” – nickname that earned the text – was presented last Thursday by the transition team proposing extra expenses and outside the spending ceiling of BRL 198 billion.

They accommodate a new R$600 Bolsa Familia, additional benefits for poor families with young children, and other social programs.

“For predictability, it is better to do [um aumento de despesa] permanent, but with a more contained value”, said Mendes in an interview with CNN.

“The biggest problem is in the value. If it increases by R$ 200 billion, even for two or three years, it is a very big damage. The duration issue is not a big problem. Once it has increased, it is very difficult to download (…). What is increased now, even though it is written that it will be temporary, when the deadline expires, there will be new pressure to renew.”