by Bernardo Caram
BRASILIA (Reuters) – The 2023 fiscal framework raises concern in view of the discussion about the continuity of temporary measures implemented by the government, Central Bank President Roberto Campos Neto said on Monday.
In a debate on inflation promoted by the Millennium Institute, Campos Neto stated that the question is how these measures will be financed starting next year, in reference to social programs temporarily reinforced by the government and Congress.
“You have a liberal institute, so you know a famous phrase: there is nothing more permanent than a temporary government program, this is something that afflicts us. Today, the market is anxious to understand how next year’s fiscal year will be, the programs that have been implemented, if they are continued, how they will be financed”, he said.
Leaders in polls of voting intentions, former president Luiz Inácio Lula da Silva and president Jair Bolsonaro have already promised to keep the value of Auxílio Brasil at 600 reais starting next year. The measure in effect today allows additional payment only until December, with the benefit returning to the level of 400 reais in January next year.
In the presentation, the BC president said that market expectations for inflation from next year onwards have risen and that there is a difference between the interpretation of analysts and that of the BC. According to him, the reason lies in the fact that the market makes a higher correlation between expectations for 2023 and current data, in addition to differences in the analysis of components such as industrials and the activity gap.
The BC’s most recent estimate points to an IPCA at 6.8% at the end of 2022, 4.6% in 2023 and 2.7% in 2024. The market, according to the Focus bulletin released this Monday, projects the index at 7, 02% this year, 5.38% in 2023 and 3.41% in 2024, with a downward movement in the current year and an increase in the following years.
The BC president highlighted the positive surprise in the Brazilian job market, stating that he “would never have imagined” to be talking about an unemployment rate below 9%.
Emphasizing that it is difficult to estimate the neutral rate of unemployment in the country – which neither pressures nor slows down inflation – he affirmed that there is still room in the labor market and estimated that the figure will probably fall to close to 8.5%.
In the three months through June, the latest data available, unemployment in the country dropped to 9.3%, the lowest level for the period since 2015, according to IBGE data.
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