{"id":9774,"date":"2023-02-23T11:57:20","date_gmt":"2023-02-23T14:57:20","guid":{"rendered":"https:\/\/www.ronaldomartins.adv.br\/?p=9774"},"modified":"2023-02-23T11:57:20","modified_gmt":"2023-02-23T14:57:20","slug":"effective-harmony-of-powers-from-fantasy-to-reality-part-2","status":"publish","type":"post","link":"https:\/\/www.ronaldomartins.adv.br\/en\/23\/02\/2023\/effective-harmony-of-powers-from-fantasy-to-reality-part-2\/","title":{"rendered":"Effective harmony (of powers) from fantasy to reality – Part 2"},"content":{"rendered":"

In the minutes of the Monetary Policy Committee (COPOM), the Committee warns that changes in parafiscal policies or the reversal of structural reforms, which lead to a less efficient allocation of resources, can “reduce the power of monetary policy.”<\/em><\/p>\n

\u00a0<\/em>The first comment (Effective harmony (of powers) from fantasy to reality) dealt, preliminarily, with the occurrence of (concrete) facts that will lead to an increase in the business tax burden.<\/p>\n

Against facts, there is no argument. Some more that support the assessment (conclusion) were brought to the debate.<\/p>\n

Marcos Mendes, an associate researcher at Insper and organizer of the book “Para n\u00e3o esquecer: pol\u00edticas p\u00fablicas que empobrecem o Brasil<\/em>,\u201d affirms that “those who do minimally reliable accounts, in the market and in academia, know that an increase in the public deficit of more than R$ 90 billion will generate a strong increase in debt, interest, and inflation, bringing down growth. Given the known figures and the open doors to the unknown, this Proposal of Constitutional Amendment (PEC) will not cost less than R$ 200 billion. It looks like a truck going downhill – and with a brake problem<\/em>.\u201d (published on the PCO website on 12\/14\/02).<\/p>\n

These warnings are reinforced by the Quarterly Inflation Report released on Thursday, December 15, by the Central Bank, when it states that “there is high uncertainty about the future of the fiscal framework” and that it will remain \u2018vigilant\u2019 as to the impacts of fiscal stimulus in 2023 and its transmission to economic activity and, as a result, to inflation<\/em>.”<\/p>\n

In the minutes of the Monetary Policy Committee (COPOM), the Committee warns that changes in parafiscal policies or the reversal of structural reforms, which lead to a less efficient allocation of resources, can “reduce the power of monetary policy.”<\/p>\n

In the Central Bank’s view, presented in the aforementioned report, there is a concern with subsidized credit. This analysis was included in the document, which brings a complete picture of the economic scenario and the balance of risks for inflation. In addition, in one of the excerpts, the Central Bank says that projections for inflation depend on considerations about the evolution of fiscal and “parafiscal” policies.<\/p>\n

When asked to detail what the “parafiscal” policy mentioned in the document would be, Campos Neto explained “that it was the amount of credit subsidized by the government.”<\/p>\n

For Campos Neto, this type of credit reduces the power of the Central Bank’s interest rate policy to fight inflation. “The decrease in subsidized credit had a great importance and relevance in the decrease of the neutral (interest) rate, and we understand that it also affects the power of monetary policy<\/em><\/strong>.” (more details in “The primer of warnings” from the president of the Central Bank to Haddad at the Treasury and Mercadante at the BNDES, in History, by Adriana Fernandes – 12\/14\/22 -Estad\u00e3o).<\/p>\n

Other relevant data, which corroborate the Central Bank’s concerns, were brought by the newsletter Exame Invest of 12\/14\/22:<\/p>\n

“The average growth in the value of food and beverages in the last 12 months reached the milestone of 8.05% above the official inflation<\/strong>. And, according to the IBGE, the items probable to be gifted<\/strong> on this date will also make Christmas more expensive<\/em>\u201d.<\/p>\n

Among the most significant price increases<\/em><\/strong> are:<\/p>\n