SAO PAULO: Brazil’s Finance Minister, Fernando Haddad, acknowledged concerns about the country’s fiscal health in a recent interview. He committed to improving the situation by restricting government spending.
WHY IT MATTERS: The Brazilian government aims to eliminate its fiscal deficit but faces skepticism from the market about its ability to do so without significant cuts to spending.
BACKGROUND: Brazil has set a goal for a zero deficit this year, allowing a slight deviation of 0.25% of GDP as per last year’s fiscal framework.
QUOTES: Haddad stated, “The fiscal framework will not work if spending is not limited.” He believes that concerns about future spending dynamics are valid and could impact national debt.
NUMBERS: Haddad highlighted that current real interest rates of 6.5-7% on public debt are problematic. He stressed that to achieve a fiscal surplus, government revenue should be around 19% of GDP, with spending kept below that level.
`
