Impact of Brazil's fiscal crisis on public services is discussed at event
05 September 2017

Impact of Brazil's fiscal crisis on public services is discussed at event

FGV’s Brazilian Institute of Economics (IBRE) held an extensive debate on “The fiscal crisis and its impacts on society” on September 1.

FGV’s Brazilian Institute of Economics (IBRE) held an extensive debate on “The fiscal crisis and its impacts on society” on September 1. Gathering experts and authorities, the event discussed how the fiscal crisis in Brazil has created barriers to the provision of public services across several different levels of government. The meeting also listed solutions and shared experiences covering everything from the macro level of planning to the micro level of effective execution of public policies and services among managers at the federal and state levels.

The event’s organizer Manoel Pires, IBRE researcher, held the opening lecture. He spoke about the IBRE’s research agenda in fiscal policy and introduced the proposal of the public finance monitoring center – a specialized center that promotes debate on economic policy, in addition to compiling historical series and training material, promoting research projects and contents regarding public finance.

Manoel Pires pointed out that the current format of public finance date started in 1997 and that the IBRE has primary federal expense estimates dating back to 1986, which allows them to study the effects of the 1988 Constitution, the inflationary stabilization in the 1990s, and each administration’s role in the growth of expenditure.

Next, the event’s first panel discussed the fiscal crisis and its effects on society, based on a federal perspective, Marcos Adolfo Ferrari, secretary of Planning and Economic Affairs of the Ministry of Planning, Budget and Management, presented the current situation of public accounts. According to Ferrari, the high involvement of mandatory expenditure in the budget has become unsustainable, since its growth could eventually lead to the collapse of entities, services and public investments.

Roberto Olinto, President of the IBGE, spoke about the importance of producing official statistical data and stated that its benefits heavily outweigh production costs. The panel also featured professor Tatiana Roque, from UFRJ’s Institute of Mathematics. The professor pointed out that the democratization of access to public universities is a policy to eradicate inequality, but also stated that current investments in Brazil are still low compared to international standards, and also lower than other Latin American countries like Argentina, Chile, Colombia, Mexico and Uruguay.

The second panel discussed the fiscal crisis from a perspective of subnational administrations. Bruno Funchal, secretary of Treasury of Espírito Santo, presented some of the factors that consolidated the state as a benchmark in fiscal management for Brazil. Renata Vilhena, public management consultant and former Secretary of Planning of Minas Gerais, spoke about the possible short-term solutions to implement adjustments with minor impacts on the provision of services. Bruno Sobral, professor of Economics at UERJ, spoke about the crisis in Rio de Janeiro, highlighting that public revenues were affected by tax and federal issues. According to Sobral, the state’s crisis must be nationalized. Finally, Mauro Osório, from Instituto Pereira Passos, spoke about Rio de Janeiro’s trajectory and challenges amidst the fiscal crisis.

The event also marked the launch of the book “Política fiscal e ciclos econômicos” [Fiscal policy and economic cycles]. Written by Manoel Pires, the book sorts the main experiences, theories and evidence regarding the subject, structured around three main pillars: international experience, theory, and empirical evidence. At the end of each chapter, the author provides an overview for readers to understand the multiple applications of all economic policies involved and its repercussions.