Pasta states that new measures to control public spending are not being drawn up or presented to the President of the Republic; however, market pressure grows with rising interest rates and rising inflation
Last Sunday (29), the recently denied the development of new measures to control public spending, even in the face of growing pressure from the financial market. Economists have expressed concerns that the current spending cut package is insufficient to curb the country’s growing public debt. The expectation is that the dollar will surpass the R$6 mark next year, which could significantly impact domestic prices, given that many products consumed in Brazil are imported. Economist Alex André highlighted the need for a new package of measures, emphasizing that the government needs to implement adjustments that have not yet been made.
Finance Minister Fernando Haddad stated that he is working on new measures for next year, but the market has not yet incorporated these expectations into its projections. Rising interest rates and rising inflation are looming concerns for 2024. In response, the carried out the largest exchange rate intervention in its history, but the floating exchange rate continues to be governed by the market. To reduce the value of the dollar, it is essential to balance public debt, which implies that the government must spend less than it collects.
Carlos Caixeta, an economist specializing in corporate governance, highlighted that, despite Brazil’s continued economic growth, the population does not see tangible improvements due to inflation, which is currently at 4.5%. Food prices, for example, rose 8% in 2024, directly affecting the consumer. Caixeta argues that the government must control public spending and implement administrative reform. He believes that fiscal and monetary policy must work together to contain inflation. Otherwise, interest rates will remain high, which could further harm the economy. The Central Bank has already indicated that interest rates should rise at the beginning of next year, which reinforces the urgency of effective government actions. Brazil’s economic situation requires a coordinated and strategic approach to prevent inflation and public debt from spiraling out of control. Implementing appropriate fiscal and monetary measures will be crucial to stabilizing the economy and ensuring long-term sustainable growth.
*With information from Luciana Verdolin
*Report produced with the help of AI
