Fiscal framework will aim for sustainability

Significance

The framework’s goal is to give the government flexibility to implement its policy commitments, including the Bolsa Familia welfare programme and increased minimum wages and public health resources. It also aims to allow implementation of a counter-cyclical fiscal policy and provide for fiscal sustainability in the medium and long term.

Impacts

• The spending cap contributed to curbing the growth of public debt, but its rigidity has represented an obstacle to policy implementation.
• The new fiscal framework will seek to make increased public spending compatible with fiscal responsibility.
• In parallel, Haddad has said that the government is drafting a set of measures to increase tax collection by more than BRL100bn (USD19.8bn).