Fiscal and monetary anchors must work together, and changing targets is not ideal, says Campos Neto

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The statement by the president of the Central Bank comes after the government proposed exchanging surplus for zero deficit in 2025. President of the Central Bank, Roberto Campos Neto. Reuters/Brendan McDermid The president of the Central Bank of Brazil (BC), Roberto Campos Neto, stated this Monday (15) that it is necessary for the fiscal and monetary anchors to work together and that the ideal is not to change the fiscal target, given that any changes in case of “deviations” need to be well communicated. The statement comes after the government released the draft Budget Guidelines Law (LDO) of 2025, which will be forwarded to the National Congress. The proposal foresees a target of zero fiscal result for next year, whereas the previous expectation was a primary surplus. READ ALSO: Government proposes reducing targets for public accounts and surplus only in 2026 Government predicts an increase of R$90 in the minimum wage in 2025, to R$1,502 The change postpones the debt stabilization trajectory initially planned when the new fiscal framework was introduced , last year. At an event promoted by the Council on Foreign Relations, Campos Neto highlighted that the market has a much worse number for the fiscal result than the government. It is very bad to change a fiscal target so soon, says Daniel Sousa about reducing the target for 2025 “Whenever there is a change in government, this makes the fiscal anchor less transparent or less credible. Thus, the cost of monetary policy becomes higher “, said Campos Neto. “The ideal is not to change the goals.” Rising global debt will be a major concern, Campos Neto said, highlighting that global fiscal policy is becoming much less coordinated with monetary policy. Asked about the proposal to use income from frozen Russian assets to pay for Ukraine’s reconstruction, he said “the moral hazard that could be created by this far exceeds the benefits.” “People need to understand that the whole system is based on the trust that once you accumulate reserves and invest them abroad, you can get your money when you need it,” he said. “As a central banking authority that has reserves invested in different places, I worry that that trust could be broken.”

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