Estadão criticizes Haddad’s financial framework

An editorial published by the newspaper State of Sao Paulo This Saturday, 1, criticized the financial framework for Minister of FinanceFernando Haddad, who will replace the public spending cap. Lula’s government wants more money to fund social programs that are supposed to benefit the poor.

Haddad said Menakanismo will determine the growth in expenses at 70% of the increase in revenues. In parallel, expenditures will have a minimum and a ceiling, guaranteeing them a real increase of 0.6% to 2.5% above inflation. This plan would be able to reduce the primary deficit to 0.5% of GDP this year, to zero in 2024 and generate a surplus in 2025 and 2026.

“Expecting increased revenue as a tangible fact is an optimism bordering on naivety, given the expression these groups have invaded Congress,” he said. Estadao. This aspect summarizes the essence of the fiscal framework proposal, which bets on unrealistic revenue growth and does not propose a single specific action to review the structural spending of the Union. On the contrary: if there is one thing that this mechanism guarantees, it is that expenditures grow year after year and are always above inflation, which is sufficient to call into question any predictions of a primary surplus.

a Estadao He stated that the foundations of the new fiscal framework weakened it from the start. The rule will not affect the funds paid to the minimum salaries of teachers and nursing, as well as the maintenance of the constitutional minimum limits set for health and education, regardless of the real needs of the regions and the frequent pooling of budgetary resources that these sectors record year after year. “Similarly, investments are out of the anchor range,” the paper noted. According to Haddad, the current level, from R$70 billion to R$75 billion, will be maintained and corrected for inflation even if revenues are depressing, but can be increased, in an extraordinary way, if collection exceeds expectations.