Campos Neto criticizes change in fiscal target: “It makes our work difficult”

The president of the Central Bank (BC), Roberto Campos Neto, criticized the government’s decision to review the fiscal target scheduled for 2025, which became a zero deficit instead of a surplus of 0.5% of the Gross Domestic Product (GDP). . For Campos Neto, this type of change makes the BC’s work more difficult.

The change was announced this Monday (15) by the Minister of Finance, Fernando Haddad, seven months after the sanction of the fiscal framework, the government’s new fiscal regime.

“Whenever there is a change in government that makes the fiscal anchor less transparent or less credible, it means that you have to pay with higher costs on the other side, so the cost of monetary policy becomes higher […] It makes our work much more difficult if there is the perception that there is no fiscal anchor, because the fiscal anchor and the monetary anchor need to work together”, stated Campos Neto at an event in the United States, this Monday (15).

The change delays fiscal adjustment and worsens the public debt trajectory, but was already expected due to the government’s difficulties in approving projects in Congress that increase revenue.

For Campos Neto, the ideal is for goals not to be changed and for “the maximum possible effort” to be made to achieve the established objectives.

“If for some reason you have to make a detour on this, it is very important to communicate well, because if people lose confidence in the fiscal anchor, then the monetary anchor is affected, and we have seen this repeatedly in our history,” he said.

In the view of the BC president, “the fiscal sphere is becoming less and less coordinated with the monetary sphere” in most parts of the world.

“There is nothing more permanent than a temporary spending program. This is a phrase I borrowed from Milton Friedman. But you see this in many different places, and I think this will become a problem”, added Campos Neto.