IMF puts pressure on government by talking about fiscal stimulus

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The recommendation of the International Monetary Fund (IMF) for countries to avoid premature withdrawal of fiscal stimulus granted to combat the effects of the new coronavirus pandemic has increased pressure on the Brazilian government as the end of emergency aid and the state of calamity approaches, scheduled for the end of the year.




Minister of Economy, Paulo Guedes, participates in event at Itamaraty 10/20/2020 REUTERS / Adriano Machado

Photo: Reuters


At the G-20 virtual summit, managing director of the International Monetary Fund (IMF), Kristalina Georgieva, at the weekend, argued that global authorities should avoid withdrawing tax relief initiatives prematurely. According to her, it is now time to prepare for a synchronized boost of investment in green and digital infrastructure to reinvigorate growth, limit scars and meet climate targets.

The IMF recommendation caused concern in the Brazilian economic team that has been defending fiscal consolidation and pointed out to representatives of the multilateral organization that the situation in Brazil is different. “The IMF did not pay attention to the specific situation in Brazil, where the set of instruments used to combat the economic effects of the pandemic was higher and resulted in higher expenditures than in other countries,” Economic Policy Secretary Adolfo told Estadão Sachsida.

According to him, given its specific characteristics, Brazil is at a time when it is more important for the poorest population to defend fiscal consolidation than the expansion of public spending. “Brazil is today in a situation where, if we spend too much, inflation rises, interest rates rise, unemployment increases, investment and GDP fall,” he points out. For him, defending fiscal consolidation is not a matter of ideology, but a policy that protects, especially, the poorest population.

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