SAO PAULO – Brazil’s Finance Minister Fernando Haddad acknowledged that financial markets are worried about the country’s fiscal situation but committed to improving it by controlling spending.
Importance
The Brazilian government is trying to find new revenue sources to eliminate its fiscal deficit, but analysts doubt it can achieve this without significant spending cuts.
Background
Brazil aims for a zero fiscal deficit this year, with a slight tolerance margin allowed, as per a fiscal framework established last year.
Key Quotes
“The fiscal framework will not work if spending is not limited,” Haddad told Folha de S.Paulo.
“Concerns about spending dynamics are valid and can impact debt,” he emphasized, assuring action from the Finance Ministry.
By the Numbers
Haddad mentioned that public debt real rates of 6.5-7% are problematic and stressed to President Luiz Inacio Lula da Silva that a fiscal adjustment is necessary for long-term stability.
He stated that for Brazil to achieve a fiscal surplus, government revenues should be around 19% of GDP, with expenses below that to stabilize debt and allow the central bank to lower interest rates.
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