In an interview with CNN this Tuesday (29), Gesner Oliveira, economist and professor at the Getulio Vargas Foundation (FGV), evaluated that establishing limits to the country’s indebtedness could be an interesting proposal for a new fiscal anchor.
The expert’s comment comes amid discussions of the so-called PEC of the Explosion, whose text was filed in the Federal Senate last Monday.
“There will be a need for new negotiations on the PEC and, most importantly, the need to define a new tax regime. One proposal that seems good to me is to establish limits on indebtedness, instead of working on the spending side, and following the guidelines of the Fiscal Responsibility Law”, he said.
“Everything will have to be discussed and defined, at the same time that the Monetary Policy Committee will assume some hypotheses about the fiscal policy to establish the interest rate. Without a new fiscal regime and predictability of what the spending policy will be, we will inevitably have the continuation of a monetary tightening to the detriment of the growth of our economy.”
Commenting on the spending ceiling, Oliveira said he considered it a “simple and rudimentary” rule, albeit necessary given the scenario of “fiscal disorganization” that Brazil was facing at the time it was created, in 2016.
“Some rule is better than not having a rule, but, naturally, there are important expenses from the social and infrastructure point of view that end up being squeezed, and this has consequences”, he declared.
“Now, we can improve it and take into account certain exceptions and how certain types of expenses occur. There is also a suggestion present in the PEC presented by Senator José Serra (PSDB), to put a limit on indebtedness, which takes into account a series of other variables that can lead to a more intelligent rule.”
According to Oliveira, it is also necessary to review the quality of public spending, and not just the quantity.
Check out the full interview in the video above.
Source: CNN Brasil
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