The fiscal package presented by the federal government is much lower than expected, according to an assessment by economist Marcos Mendes, associate researcher at Insper.
In an interview with the newspaper WWthe economist highlighted that economic measures are insufficient to contain the growth of public debt, the main objective of fiscal adjustment.
The details of the fiscal adjustment package and Income Tax exemption for salaries up to R$5,000 were presented this Thursday (28). .
Mendes highlighted that the country’s economic situation is worrying, with public debt reaching around 78% of the Gross Domestic Product (GDP), an increase of almost seven percentage points since the beginning of the current presidential term.
“This is during a period in which GDP is growing strongly. In other words, with GDP growing strongly, the tendency would be for the debt-GDP ratio to fall. But even so, she is growing. We already have real interest rates in the range of 7%, which demonstrates distrust in the solvency of the debt”, warned the researcher.
The Insper researcher also pointed out the factors that compromise fiscal adjustment. For Marcos Mendes, there are three main reasons for the government’s failure to present a more robust fiscal package.
“Firstly, there is no internal convincing of the PT [Partido dos Trabalhadores] about the need for adjustment. The PT makes a movement to react to what society is seeing. Secondly, we have been observing an imbalance in relations between the Executive and Legislative branches for some years, with Congress gaining prominence and showing little concern with macroeconomic stability. Thirdly, we have arrived at a time of exhaustion of the model of increased spending financed by increased tax burden and debt, in force since the 1988 Constitution.”
Mendes emphasized that the moment requires a demonstration of a very serious change in fiscal stance by the government, which did not occur.
“The proposal is that the Legislature, together with the Executive, become aware of the seriousness of the problem and deepen fiscal measures beyond what was presented”, concluded the researcher.
