The bank Itau BBA issued an analysis indicating that the change recently approved by the Chamber of Deputies undermines the credibility of the Brazilian fiscal framework.
Itau BBA Review
In a report released this Thursday (11/04), Itaú BBA bank expressed concerns about the consequences of the measure approved by the Chamber of Deputies. According to the analysis, the decision taken could have significant impacts on the country's economy.
Impact on Fiscal Credibility
Itaú BBA stressed that the approved change could undermine investor confidence in Brazil's fiscal framework. The decision could be interpreted as a sign of weakness in the government's economic policies.
The measure in question has raised questions about Brazil’s commitment to fiscal discipline and public debt sustainability. This could result in an increase in risk premiums associated with investments in the country.
Economic Analysis
According to Itaú BBA's analysis, the change approved by the Chamber of Deputies may have direct implications on Brazilian economy. Rising risk premiums may discourage investment and make access to financing more difficult.
Furthermore, the Itaú BBA report also raised concerns about the long-term impact of the measure. According to the bank, the loss of fiscal credibility could affect the government's ability to implement effective economic policies in the future.
This, in turn, could lead to lower economic growth, deterioration in the quality of public services and increased poverty. In short, the outlook for Brazil's future is worrying if the measure is not revised.
Future perspectives
In short, the change approved by the Chamber of Deputies undermines the credibility of the Brazilian fiscal framework, with potential negative effects in the short and long term.
Firstly, Itaú BBA believes that the change undermines economic agents' confidence in the government's ability to honor its fiscal commitments. This, in turn, could lead to an increase in interest rates and capital flight, harming economic growth.
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