“The best social policy that exists is to end inflation,” he told CNN Gustavo Loyola, former president of the Central Bank and partner at Tendências Consultoria Integrada.
“Inflation is terrible for lower income families. It is a kind of tax that falls on the poorest. (Fighting inflation) is a task of the Central Bank. Just let the BC do its job properly and inflation will converge to less, maybe not for 2023, but possibly for 2024. What the government can do is not get in the way. What could get in the way? Fiscal irresponsibility,” she said.
Loyola’s speech comes in the wake of growing concerns from market economists about the possibility that the increase in expenses brought about by the PEC do Burst will put pressure on prices in the economy.
“(The uncontrolled increase in spending) raises the risk premium, investors become more cautious in relation to Brazil, which may affect the exchange rate. And the BC has to practice the highest interest rates, that is, the dose of anti-inflationary medicine has to be increased if the government does not deal well with the fiscal issue, ”he said.
The former BC also commented on the expectations regarding the choice of the Minister of Planning, whose main responsibility involves the management of public budgets.
“The Ministry of Planning takes care of the budget, so it needs a technician, but it also needs someone with the ability to dialogue with Congress and who works with the Treasury, forming a cohesive economic team”.
“If (the future minister) has a “spending” profile or one that is not committed to fiscal adjustment, this would be seen negatively, because it could be a counterpoint to the Treasury, which is in the Treasury. It needs to be someone aligned with the reform agenda, the new fiscal framework”.
On the promise of the Lula government to announce the new fiscal framework that will replace the spending ceiling, Loyola points out that “the important thing is that there be a predictable rule, which is easily enforceable and transparent”.
However, he points out, the rule needs to be accompanied by structural reforms.
“The fiscal rule has to be accompanied by reforms that make this rule feasible. It is not possible to create a fantastic tax rule, but one that is unattainable or a tax framework that everyone is passively waiting for it to resolve the situation”.
*Watch the full interview in the video.
*Posted by Ligia Tuon
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.
