Accounts in order for lower interest rates and inflation
Proposes overhauling the fiscal rules with a focus on stabilizing and reducing public debt, delivering primary surpluses and creating a rule to control discretionary spending by the three Branches.
What the program says
The PT (Workers’ Party) destroyed the spending cap with, above all, a project of power in mind: it removed the sanctions and the brakes and designed fragile rules that could be changed whenever convenient, always focused on reelection. To blow up the cap, it passed a transition PEC (proposed constitutional amendment) that took the spending-control rules out of the Constitution and tossed them into a complementary law. Feigning responsibility, it in practice created ever-growing discretionary spending: legislation that was born full of exceptions and had its own rules breached more than a dozen times, opening new spending outside the limit and taking the debt to its staggering current level. We will do the opposite: we will make our spending fit within the budget, which will make it possible to charge lower taxes and will not push debt onto the next generations. We will present an overhaul of the current fiscal rules, with clear rules focused on stabilizing and reducing public debt, as the Constitution requires. We will build lasting fiscal balance, delivering primary surpluses and limiting credit subsidized with Treasury funds, mitigating inflationary pressures. And there will be a clear rule to control the discretionary spending of the three Branches of the federal government. Clear rules bring predictability and credibility, making the country more attractive and competitive. The goal is to achieve, in the shortest possible time, stability and then a decline in the debt-to-GDP ratio, which pulls interest rates toward the international average and brings inflation to the center of the target. It is not an economist’s abstraction: it is what makes installment credit affordable, makes a home loan possible and keeps wages from melting away at the end of the month. Alongside this, a management shock will put public assets at the service of society, with a reform of the budget process and a permanent agenda of transparency and public-policy evaluation, identifying who the beneficiaries of each program are and measuring the real impact of each expenditure. Public money is the citizen’s money, and every real has to show what it delivered. [p. 70, 71]
In plain language
- The text states that the current fiscal legislation was born with exceptions and has had its own rules breached more than a dozen times, opening spending outside the limit. It proposes overhauling the fiscal rules, with a focus on stabilizing and reducing public debt, in line with the Constitution.
- It provides for making spending fit within the budget, delivering primary surpluses, limiting credit subsidized with Treasury funds and creating a rule to control the discretionary spending of the three Branches of the federal government.
- The goal cited is to achieve, in the shortest possible time, stability and then a decline in the debt-to-GDP ratio. The text states that this pulls interest rates toward the international average and brings inflation to the center of the target.
- It also proposes reforming the budget process and maintaining a permanent agenda of transparency and public-policy evaluation, identifying the beneficiaries of each program and measuring the impact of each expenditure.
What is not in the program
- It gives no figures for the primary surpluses and no target level for the debt-to-GDP ratio.
- It sets no deadline for the debt goal; the text says “in the shortest possible time”.
- It does not detail what the new rule to control discretionary spending would look like, nor whether the new fiscal rules would sit in the Constitution or in a complementary law.
- It does not say by how much credit subsidized with Treasury funds would be limited, nor which programs would be affected.
- It does not detail what would change in the budget process.