Economist says that Auxílio Brasil outside the spending ceiling will drive away investors

Economist says that Auxílio Brasil outside the spending ceiling will drive away investors

Photo: Disclosure/XP Investimentos

Camila Abdelmalack, chief economist of Vedha Investments, stated that the prices of the dollar and of the stock Exchange reflect the perception of investors about the disrespect of the country’s fiscal rules. According to her, a Brazil Aid with resources outside the spending ceiling It’s bad for public accounts and will result in more inflation.

According to her, with the uncertainties about the 2022 budget and how the government will be able to pay a boosted Brazil Aid, investors are adopting a cautious position that results in a rise in the dollar and a fall in the B3.

“The Fiscal Responsibility Law requires a permanent source of income or permanent spending cuts to create a new expense. As the government is unable to close the equation to pay Brazil Aid in greater amounts, the technicians carry out alternative studies, such as the extension of emergency aid. But any spending outside the spending ceiling is bad. Just look at our exchange rate and asset prices, which already reflect this perception of risk”, he said.

The economist also stated that the trend is for an increase in the dollar and a fall in the stock market in an election year, given the uncertainties about the progress of reforms to balance public accounts, attract investments and help in the economic recovery.

“The political scenario does not look favorable for the approval of economic reforms. When proposals are made that could worsen the situation of public accounts, the tendency is for investors to leave the country. In addition, with the rise of the dollar, inflation should increase”, he said.

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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