A social spending plan that does not consider fiscal responsibility would probably lead Brazil to a recession, argues José Márcio Camargo, chief economist at Genial Investimento.
In an interview with CNN this Saturday (15), the specialist calculates that, if all the promises made during the campaign by the elected government are implemented next year, the federal public debt, currently at around 75% of the Gross Domestic Product (GDP), could rise 4.5 percentage points, deteriorating the economy.
“The fundamental point here is that Brazil is emerging. (Increasing the debt) would generate an increase in the fiscal cost, an increase in the interest demanded by investors to finance this debt and, consequently, an increase in the interest rate, exchange rate devaluation, inflation and, most likely, a very strong recession”, he says.
“We think that, by fulfilling your promises, you will be being responsible from a social point of view, but, in the end, you will be being socially irresponsible because you were irresponsible from a fiscal point of view”, he says.
The economist also argues that there is no question of fiscal versus social responsibility. “In fact, social responsibility you can only achieve if you have fiscal responsibility”.
“The important point is that a huge set of promises were made throughout the campaign by both president-elect Lula and President Bolsonaro, but who was elected was former president Lula and, consequently, who will have to decide what will be implemented is former President Lula. If we add up all the expenses and promises presented throughout the campaign, it comes to something around R$400 billion more in permanent public spending”.
Camargo cites items such as the increase in Auxilio Brasil to R$600, the inclusion of R$150 for children, the end of the SUS queue, the increase in the minimum of 1.4% in real terms, the increase in income tax exemption for BRL 5 thousand. “That is, it is a very large set of proposals with an extremely high cost”.
See 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.
