A recent study by FGV reveals that Brazil needs to achieve an annual primary surplus of 1.5% of GDP to stabilize public debt and avoid a fiscal crisis.
Increase in Primary Surplus
- Current Goal: The primary surplus target for 2024 set by the Brazilian government is 0.5% of GDP.
- Need for Increase: The FGV study argues that this target is insufficient to contain the growth of public debt. Therefore, it does not guarantee the sustainability of fiscal accounts;
- Positive Impacts: Increasing the primary surplus to 1.5% of GDP, as suggested by economists, would have a positive impact on the trajectory of public debt. Therefore, it would reduce the risk of insolvency and contribute to lower interest rates.
Conditions for Achieving the Goal
- Control of Public Expenditure: Controlling public spending, prioritizing the reduction of unnecessary expenses and the optimization of resources, is crucial to achieving the primary surplus target of 1.5% of GDP. In addition, this control is essential for economic stability;
- Increase in Federal Revenue: Increasing federal revenue through measures such as tax reform and combating tax evasion is crucial to achieving the surplus target. Therefore, it is necessary to prioritize these initiatives;
- Sustainable Economic Growth: Sustainable economic growth is vital to increase tax collection and therefore contribute to achieving the primary surplus target.
Importance of Fiscal Balance
- Macroeconomic Stability: Fiscal balance is essential to ensure macroeconomic stability, reducing inflation, fees and exchange rate risks.
- Investor Confidence: Fiscal commitment boosts investor confidence, encouraging investment. This benefits the Brazilian economy, both nationally and internationally;
- Sustainable Growth: Fiscal balance fosters sustainable economic growth, enabling investments in education, health and infrastructure.
Challenges and Perspectives
- Tax Challenge: The main challenge for Brazil to achieve the primary surplus target of 1.5% of GDP lies in the need to contain the growth of public spending and increase federal revenue;
- Government Efforts: The Brazilian government needs to implement consistent and effective measures to control expenses, increase revenue and promote sustainable economic growth;
- Achieving Balance: Achieving fiscal balance will allow Brazil to stabilize public debt, reduce interest rates, increase investor confidence and boost sustainable economic growth.
Image: Reproduction/Internet
