Fiscal policy deserves more attention, warns IBRE economist

The primary surplus target of 1.9% of the GDP is already considered a very distant target in view of the weak economic activity and some accounts that were underestimated by the government. For the researcher in the field of Applied Economics of the Brazilian Institute of Economics (FGV/IBRE), Gabriel Leal de Barros, the main issue behind the deterioration of the macroeconomic structure today is the weakness of the fiscal policy. We've accumulated passive attitudes and a number of measures in the fiscal sphere should be reconsidered and reversed, providing more impetus to restore the generation of fiscal balances, he said.According to Barros, the tax exemption measures need to go through a careful examination while others should have more control of public spending. He said that the debates of sensitive issues, such as the rule of minimum wages and other expenses with income transfers, need to be rethought. Today the greatest cost among the many that exist is the credibility of the statistics and commitment to the fiscal targets. It is necessary to attack this point effectively and one measure is to change the current tax system, he explained. In Barros' opinion, the adoption of the structural fiscal result can be a good solution, able to reconcile the gradual adjustment to the need of increasing the level of public investment in the economy.The economist also acknowledges that adjustments are not welcome, but in the current situation, he argues that they are much needed. In the researcher's opinion, there are two options: either the adjustment is done now with high political and social costs, or it is postponed to the next four years, at a moment when the costs will be even higher. It is a fact that a new adjustment in fiscal policy implies high costs. However, not performing any adjustments costs much more than doing nothing, or doing it in a neglectful way, he concluded.Please visit IBRE's site and check other analysis.








