For Goldman Sachs chief economist for Latin America, Alberto Ramos, the main problem Brazil faces is fiscal policy. “From a market perspective, problem 1, 2 and 3 of Brazil is tax,” he says.
The economist participates in the event Brazil: Macroeconomic Stability, Climate Change and Social Progress It also has the presence of Caio Megale, chief economist of XP, Carlos Viana de Carvalho (Kapitalo Investimentos and PUC -Rio) and Marcos V. Mascano, from the World Bank and was organized by the XP Private Bank and the Department of Economics of Miami -Herbert Business School.
“Countries with greater debt, such as Brazil, tend to grow less on average and have greater volatility in macroeconomics,” says Ramos, citing a study by the foreign bank. “The more you spend, the less you grow,” he says. “You basically lose fiscal policy as a management tool for the government.”
“We really need to change the course of fiscal policy,” says Carlos Viana de Carvalho, from Kapitalo Investimentos. “It’s hard to see a macroeconomic path that favors everyone without moving debt dynamics.” In his view, for the Central Bank it is challenging to contain inflation if there is an fiscal policy in an unsustainable trajectory.
There are two ways that matter in this subject, according to Carvalho. The first can be seen as the cyclic pathway, considering the growth of spending that the government has presented and has contributed to the growth of the economy and the fall of unemployment. But, on the other hand, there are some structural issues that should be observed in relation to interest.
Among the points is the loss of credibility of the Central Bank with the rise of interest present since December 2024. This would be one of the biggest challenges faced by the municipality, especially considering the market’s view of whether it would be done by the BC the necessary for inflation to reach the target. In addition, Carvalho maintains that the impact of fiscal policy is a relevant part of the search for interest that stabilizes net debt/GDP.
