Finance Minister Fernando Haddad emphasized that Brazil should not solely focus on improving public accounts but also prioritize economic growth. He outlined proposed reforms for payroll loans and fiscal sustainability, while addressing internal political critiques, aiming for a balance in fiscal strategy that fosters long-term economic health.
Brazil’s Finance Minister Fernando Haddad emphasized that while there is potential for improving the country’s public accounts, it should not be the singular priority. He stressed that economic growth is crucial for any fiscal adjustments. At a recent BTG Pactual event, he stated, “we have conditions to keep improving public accounts, but we should not focus solely on that.”
Haddad highlighted proposed reforms aimed at providing formal workers with access to lower interest rates on payroll-deductible loans, which he described as a “revolution.” He also urged Congress to support a proposal allowing the use of payment flows from the instant payment system, Pix, as collateral for securing lower-interest loans.
He proposed a scenario where public revenue reaches about 19% of Gross Domestic Product (GDP) paired with 18% spending, suggesting this balance would create a sustainable fiscal environment for Brazil, enabling microeconomic reforms. Amid declining approval ratings for President Luiz Inacio Lula da Silva, some allies have critiqued Haddad’s approach to economic policy, though he noted that there is greater unity within the government now than two years ago.
Haddad defended the fiscal framework enacted under Lula in 2023, which balances a primary balance target with a spending growth cap. This strategy includes integrating various expenditures into the framework and implementing a minimum wage increase limit related to general spending growth.
Haddad concluded, saying, “this is the path to long-term fiscal sustainability in Brazil,” reinforcing his commitment to fiscal responsibility while seeking growth-enhancing reforms.
Finance Minister Haddad advocates for a balanced approach in Brazil’s fiscal policy, stressing the importance of both improving public accounts and fostering economic growth. With proposed reforms and a sustainable fiscal framework, he aims to establish a strong foundation for Brazil’s economy amidst political challenges. The emphasis remains on achieving fiscal sustainability through strategic reforms rather than solely focusing on budgetary improvements.
Original Source: www.usnews.com
