State accounts will be a challenge for 2023, says chief economist at Santander

In an interview with CNN this Wednesday (15), the chief economist and director of macroeconomics at Santander Brasil, Ana Paula Vescovi, stated that, with the approval of the project that sets a ceiling for ICMS on fuel, the challenge for 2023 “will be the states account”.

According to the expert, the project can bring relief, in the short term, to inflation. However, the chief economist believes that the measure should harm the accounts of federative entities.

“The issue of the states is very peculiar… the states’ cash is full of resources, but they are tied up. Due to the nature of fiscal policy in Brazil, many of these resources are linked to health, education, and past revenue. So these cashiers are not free.”

Vescovi, also commented on the interest increase announced by the Central Bank (BC) and the Federal Reserve the central bank of the United States.

This Wednesday, the Central Bank’s Monetary Policy Committee (Copom) announced a 0.5 percentage point hike in the basic interest rate. Thus, the Selic rate increases from 12.75% per annum (pa) to 13.25% per annum.

In addition to the BC, the Federal Reserve also announced that it raised the country’s interest rates by 0.75 percentage point, the highest since 1994 as the country tries to deal with inflation at the highest level in 40 years.

For the chief economist, the rise in US interest rates is a sign of a future recession.

“The high [anunciada pelo Fed] leads us to believe in a possible recession between the end of 2023 and the beginning of 2024. It is a component that combines, on the one hand, the persistent increase in the mass of wages, above 5%, and, on the other hand, an inflation that is also more high,” he explained.

See more in the video above.