The entity warned that the modification of the fiscal rules should have been limited to specifically modifying the fiscal deficit limit for 2024.
The Fiscal Council issued a new statement on DL No. 1621, which modified the fiscal rules applicable to the non-financial public sector, and stated that postponing the convergence of the public deficit to the limit of 1% of GDP until 2028 “transfers the greatest consolidation effort to the next Government.”
As you may recall, the Ministry of Economy and Finance (MEF)By law, it had to reach an annual deficit target (2.8% in 2023) until reaching 1% in 2028. That is, increasingly reducing the overspending incurred on the budget allocated in each fiscal year.
It will not be achieved, because revenue collection is at an all-time low, because Congress is exceeding its functions with repeated spending initiatives, and because the economy is not picking up. So, the MEF asked the same congressmen to change the path of the fiscal rule and lower the barrier to overspending.
The Fiscal Council now questions that the “fiscal consolidation” is charged to the next Government, especially at a time when the “Information indicates that significant revenue growth could occur in 2025, bringing the deficit to a level similar to that of the previous rule” .
“Despite the extension, there is a high probability of default in the short and medium term. At the end of the first half of 2024, the deficit is at 3.9% of GDP, significantly above the new limit of 2.8%,” he warned.
Source: Larepublica
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