Campos Neto sees a rise in spending in Brazil ‘well above the global average’ and defends approval of the economic agenda by Congress

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President of the BC once again said that the government must insist on trying to eliminate the deficit in 2024, even if it fails to meet the target. He participated in an event promoted by Abracam. The president of the Central Bank, Roberto Campos Neto Edilson Rodrigues/Agência Senado The president of the Central Bank, Roberto Campos Neto, stated this Monday (2) that spending growth in Brazil is “well above the average for the emerging and developed world “. During an event promoted by the Brazilian Foreign Exchange Association (Abracam), Campos Neto stated that the country’s public budget is compromised, with a high level of mandatory expenses, such as funding the public machine. He also said that Brazil needs to face the problem of public accounts, and defended the approval of projects sent by the economic team to Congress, so that the government can increase revenue. “We always recognize that it is difficult to cut spending structurally. I have observed for 15 and 20 years, it is difficult to cut structural spending [de forma permanente]. They have some temporary expenses, such as civil servant salaries. Perhaps additional reforms can play this role, but it is an equation that we need to address in a more structural and long-term way”, declared the president of the BC. Presentation by the president of the BC, Roberto Campos Neto Reproduction of presentation by the BC Campos Neto also said that the above-average growth in spending in Brazil is reflected in the so-called “risk premium” – that is, in the amounts charged by investors when purchasing Brazilian public bonds, which is necessary for Brazil to honor its debt. In April, During a hearing in the Senate, Campos Neto had already warned about the increase in the country’s debt, highlighting that this influences the high interest rate charged in Brazil. Projects ‘need to pass’ in Congress At the Abracam event, the BC president also cited research from Genial Investimentos who says that, for those interviewed, the main problem of the Brazilian economy is the “lack of a fiscal policy that works.” “We need to have this structural address on the fiscal side [melhora permanente das contas públicas]. People understand that, once the tax is addressed, interest rates have a natural convergence [queda mais consistente]”, he declared. In Campos Neto’s assessment, this is not a criticism of the government of President Luiz Inácio Lula da Silva (PT), but rather of the country’s fiscal system. Last week, in an attempt to bring closer together, Lula and the Minister of Finance, Fernando Haddad, received Campos Neto for a meeting. According to Haddad, the meeting, which took place after a series of attacks by Lula on the BC president, served to “build a relationship” between the two. Campos Neto repeated that The economic team must persist in trying to achieve fiscal goals, which foresee, for example, achieving a zero deficit in government accounts in 2024, but also noted that the financial market, so far, still does not believe that this will happen. “The government announces a fiscal plan, but the market thinks the numbers will be worse. Why is there this difference? Basically by how much the government would have to have in extra revenue to reach the target. We need to observe these projects that are in Congress, they need to pass because they bring additional and stabilized revenue”, explained the president of the BC. Balance of public accounts According to the economic area’s accounts, R$ 168 billion in increased revenue would be needed to eliminate the deficit in public accounts in 2024. Economists interviewed by g1 assess that the government’s economic team has failed by not giving the same weight to spending cuts as it has given to the development of measures to increase revenue. And they indicated possible measures. In this At the beginning of the week, the president of the BC, Roberto Campos Neto, also stated, however, that in the “medium and long term, we are observing stability in the [expectativa do mercado para] debt trajectory”. According to financial market forecasts, due to the approval of the “fiscal framework”, the new rule for public accounts, Brazilian debt could stabilize after 2030 – at a level close to 90% of GDP In August, the debt was 74.4% of GDP.

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