The idea of adding almost BRL 200 billion in extra spending to the 2023 Budget, removing the obligation to meet the spending ceiling, does not solve the main problem of the country’s public accounts, which is the size of its public debt in relation to the of its Gross Domestic Product (GDP).
This is what former finance minister Maílson da Nóbrega defended in an interview with CNN this Thursday (17th), when commenting on the spending pump proposed by the Transition PEC – already called the “Explosion PEC“.
The text was presented yesterday by the transition team of President-elect Luiz Inácio Lula da Silva proposing extra expenses and outside the spending ceiling to accommodate a new Bolsa Família and other programs in the 2023 Budget.
“These are violations of basic concepts of public finance that are being made with this PEC”, said Nóbrega.
“The exclusion of the Bolsa Família spending ceiling is an absolutely wrong measure (…) and, worse, it excludes it from the primary surplus”, he added, mentioning the account that takes into account the difference between everything the government spends and everything what it collects, excluding expenses with payment of interest on the debt.
The decision, according to him, is just an “accounting maneuver” that could prevent the number from going negative, but which, in practice, continues to keep the government in the red, which results in a further increase in public debt.
“The surplus serves the government to pay part or all of the interest on the public debt and avoid an explosive trend in the debt-to-GDP ratio, which is the main solvency indicator of the public sector and what is closely watched by investors,” explained Nóbrega .
“It won’t fool anyone, because the fact of making an accounting maneuver to characterize a primary surplus does not mean that the debt-GDP ratio will not change. She is the end result.”
Watch the full interview in the video above.
*Posted by Juliana Elias, from CNN Brasil Business
Source: CNN Brasil
A journalist with over 7 years of experience in the news industry, currently working at World Stock Market as an author for the Entertainment section and also contributing to the Economics or finance section on a part-time basis. Has a passion for Entertainment and fashion topics, and has put in a lot of research and effort to provide accurate information to readers.
