Fabio Giambiagi states that the government contradicted the “political cycle” by expanding expenses and will have to reduce them by 2026
Economist Fabio Giambiagi, 62, said the president’s government (PT) exaggerated the expenses in the early 2 years of his mandate.
“The government clearly has a political restriction defined by the President of the Republic and the Government Party that expresses a huge resistance to contain the trajectory of public spending“, Disse Giambiagi.
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The economist said that excess spending will force the government to hold the accounts in 2026, when there will be election for deputies, senators, governors and president. This contrasts, he said, with what Lula did in his first term, from 2003 to 2006.
“In 2003, the government took a classic action within a traditional political cycle. It holds the expense at first and spends more as it approaches the elections. It happened just the opposite recently. In the first year, the government spent what it had and what it didn’t have. Will be forced to contain the expense as it approaches the elections ”he said. It evaluates that it will be necessary to freeze some expenses, which will mean cut in real terms, discounting inflation. This may result in government conflicts with the PT.
Giambiagi said that the constitutional rule that limits public spending approved by 2023 will require a long time to reduce expenses: “With a rule starting from a poor fiscal situation, such as Brazil in 2023, it will take a long time to adjust. The initial situation makes a huge difference”.
He criticized 2 tax rule items:
- Annual increase in health expenses for revenue variation;
- Annual Royal Increases of the minimum wage.
For Giambiagi, there was a government assessment error by failing to resist pressures in the processing of the PEC (proposed amendment to the Constitution) of the tax framework.
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MINIMUM WAGE
Regarding the value of the minimum wage, the economist has contested assessment that it is a topic of high electoral impact. “[Jair] There was no penny to the minimum wage in real terms from 2019 to 2022, and even with all the problems of his government, he had 49% of the votes [em 2022]. So no one will convince me that it is impossible to have good electoral performance without increasing the minimum wage in real terms“, These.
Giambiagi said that a new pension reform will be needed. The limit for this, he said, is the beginning of the next decade. “No doubt it is necessary [nova reforma]. The early years of government have more favorable circumstances for this. If not viable in 2027, in 2031, [a reforma] will become inexorable. 2019, postponed the retirement of a lot of people. From 2027, this effect will be exhausted, with significant growth of pensions”He told the digital newspaper.
Commence
The economist assessed that GDP growth (Gross Domestic Product) has been surprisingly high since 2021. But it pointed out that this is not due to a structural change: “The 2020 crisis generated huge idleness. Brazil in recent times has grown occupying idle capacity”.
PRODUCTIVITY
Expanding the country’s growth in a sustainable way, said Giambiagi, will require increased productivity. It is something that, according to the economist, depends on a cultural change in the country.
“[A baixa produtividade] It stems from the absence of a pedagogical role of governments to show the advantages of competition. Any child who accompanies football understands that a good player from a state -of -the -art team in the Brazilian Championship will benefit if he played in the following championships in European teams”.
New book
The new book by Giambiagi, “Tocqueville’s revenge”should arrive in bookstores from February 24, 2024. The work is about the economic and political history of Brazil from 1945, after World War II. Includes evaluations on the challenges to accelerate the country’s economic development.
Giambiagi is the son of Argentines. He was born in Rio de Janeiro and spent part of his childhood and adolescence in Buenos Aires. Then he returned to live in Brazil. It has a degree and master’s degree in Economics at UFRJ (Federal University of Rio de Janeiro). He has been an employee of BNDES (National Bank for Economic and Social Development) since 1984. He has also been an associate researcher at IBRE/FGV (Brazilian Institute of Economics of the Getulio Vargas Foundation).
