SAO PAULO – The trajectory of the public debt over time is much better than the short-term political noises indicate, said Roberto Campos Neto, president of the Central Bank, on Tuesday (24). “The numbers are now better than the expectations the market had before the pandemic,” stated the chairman.
The economist participated in the panel “Perspectives and challenges of the economy and monetary policy in Brazil”, by Expert XP 2021. Watch the highlights in the video above.
According to Campos Neto, the market’s perception that projects such as the Proposed Amendment to the Constitution (PEC) of Precatório and the tax reform aimed at increasing the value of the Bolsa Família benefit ended up harming the performance of Bolsa Familia. and future interest rates, but that this does not mean that there is, in fact, a worsening in the fiscal situation.
Neto recalls that before the coronavirus pandemic, market agents’ perspectives were that the public debt divided by Gross Domestic Product (GDP) ratio would reach 81.5% or 81.7% in 2022. After Covid-19 started to impact the economy, these projections rose to 100%, but today, after everything that happened, the ratio is close to 82%.
“We have a better picture of gross debt over time, but the noise exists and impacts the market when the news comes out in real time”, he assesses. The BC president also defended that the fiscal part did not improve only because of the inflationary effect, showing a graph that attributes 5.46% to the deflator of the 13.7% difference between Focus’ projection for debt/GDP in November 2020 and the projection in August 2021.
Campos Neto also highlighted that the control of expectations is the most important variable in fighting inflation and assured: “the Central Bank pursues the target in the relevant horizon”.
For him, it is important to emphasize that the BC uses the data it has available at the time, and when it started to make a partial increase in interest rates, economists, according to projections compiled in the Focus Report, were still expecting inflation in the target.
The economist believes that inflation will be less pressured in the future, as the migration from consumption of services to consumption of goods that took place during periods of stricter mobility control should be reversed from now on and service prices are less elastic than than those of goods.
Pix and Open Finance
About the PIX instant bank transfer tool, Campos Neto stated that he did not expect it to become so widely used in such a short time. “Contrary to what was used, it wasn’t just a replacement effect for TED and DOC, there was actually an increase in digital transactions. Street vendors already use PIX”, he pointed out.
The BC president said that the monetary authority is in connection with representatives from Italy and England to create the international PIX and pointed out that this digitization is going in the way of monetization and greater data efficiency proposed by the initiative open finance.
Neto even revealed that he had joined with the minister of Health, Marcelo Queiroga, to create the open health, in which people would have access to compare health plans through their data.
“We hope that all of these innovations are up ahead. O open finance in Brazil it will be one of the widest that exists”, he concluded.
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