Since the announcement of the economy in a stable and predictable way.
Fiscal credibility, which is the confidence that the government can meet its financial commitments, depends on strict control of public spending and clear communication. However, the government has faced difficulties on both fronts. Internally, there is a , which prioritizes increased spending without adequate attention to its quality or long-term impact.
This divergence, in addition to being widely publicized in the press, materialized in the recent announcement of a timid fiscal package accompanied by . The strategy of combining these measures was interpreted as an attempt to minimize political strain, but it ended up obscuring the government’s commitment to fiscal responsibility, generating confusion instead of trust.
The financial market reacted negatively. The Warren Rena consultancy estimated that, well below the R$70 billion projected by the Ministry of Finance. This divergence in estimates reinforces the perception of inconsistency and lack of clarity in economic policies. The JP Morgan bank, in turn, predicted an increase of 1 percentage point in the Selic rate, which could reach 14.25% in December. In a report, the bank stated that the measures presented “failed to restore the credibility of economic policy.”
This perception gained more strength as it closed at R$5.9891, renewing the highest nominal value of the American currency. Throughout the trading session, the dollar reached R$6, which should have an impact on families’ cost of living. This appreciation of the dollar makes imported products, such as food, medicine and fuel, more expensive, putting pressure on inflation and reducing the purchasing power of the population, especially those with lower incomes.
Messy communication makes the situation worse. Studies such as those by Mendonça and Nicolay (2017) show that clear and consistent communication is essential to align market expectations and reduce uncertainty. However, the government has been contradictory. Sometimes defending fiscal adjustment on the revenue side and pointing out the size of subsidies and privileges, sometimes announcing This lack of cohesion raises doubts about the ability to comply with the fiscal framework, a set of rules designed to control public debt, consequently reducing interest and relieving inflation.
In the end, the result of a history of fiscal irresponsibility by the political group in power, inconsistent economic policies and poor communication. To reverse this situation, the government would need to present a robust, detailed fiscal plan focused on structural reforms that show commitment to long-term solvency. Without this, the economic scenario will remain unstable, putting pressure on families’ cost of living and making it difficult to regain confidence in the markets.
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