New fiscal anchor will need a rule to control government spending

The new fiscal framework that establishes an anchor to replace the spending ceiling, to be announced in April by Minister Fernando Haddad, of Finance, needs to have a rule that controls the growth of expenses following a “healthy” increase in revenues. The need for this instrument is cited by Rogério Ceron, secretary of the National Treasury, in an interview with the newspaper O Estado de São Paulo published this Thursday (9).

According to him, the discussions in the department are still in progress and the technical definitions of the new framework should advance throughout the month of February. Ceron explains that the current spending ceiling is impossible to meet due to the growth in expenses – and, therefore, the need for a rule to control expenses.

“The ceiling freezes expenses; to change it, it would have to be something above that (real growth, above inflation). This growth has to be anchored in a healthy rise in revenues, which has to do with economic growth”, he says.

For the secretary of the National Treasury, the discussion is “to make a rule that is feasible, but without losing control”, in which expenditure follows revenue and does not generate future over-indebtedness. “The main focus is on spending, and that we have a sustainable revenue level”, he says.

Still in the interview, Rogério Ceron says he is optimistic about the fiscal package presented by Haddad and that it is possible to reduce the deficit to less than 1% of GDP – around R$ 100 billion. “I believe we will exceed expectations about the package. As far as the Treasury is concerned, we will surprise positively”, he added.