Lula’s campaign debates imposing a band on the surplus

Lula’s campaign debates imposing a band on the surplus

Economists linked to Luiz Inácio Lula da Silva’s campaign have been debating a fiscal anchor model based on surplus targets that contain a band, so that they can vary depending on the national and international economic context.

At a dinner with businessmen from the Esfera group, on Tuesday night (27), in São Paulo, Lula defended the end of the current fiscal anchor, based on a spending ceiling, and spoke of a return to a regime of fiscal surpluses, as it was during their governments.

However, economists have been evaluating the possibility of imposing a band on surpluses. With that, when the economy is less heated, it takes advantage of it to make a smaller surplus or even a deficit to try to warm up the economy. If the economy is more heated, there would be a larger surplus or a smaller deficit.

On the 22nd of August, the CNN showed that the campaign debated at least three fiscal rules to replace the spending ceiling—surplus was one of them. The debates evolved into a variation of this rule with the imposition of a band.

However, nothing is ruled out. The assessment is that it will also be necessary to analyze the political context — such as the configuration of the new Congress — for the model to be defined.

A combination of rules is also possible. It is mentioned, for example, to combine a surplus rule with a rule that controls spending, but creates a space for the value to evolve beyond inflation (IPCA), limited to GDP growth so as not to increase the size of the state in the economy.

Source: CNN Brasil