The Fiscal Council warns about risks in the Macroeconomic Framework and fiscal sustainability.

In a recent statement, the Fiscal Council expressed its concern regarding the Multiannual Macroeconomic Framework (MMM) 2024-2028, highlighting the challenges the country faces in terms of fiscal sustainability. The non-binding opinion of the council, led by its president, emphasizes that the projected medium-term growth rates of Gross Domestic Product (GDP), set at an average of 3%, are excessively optimistic and could lead to an overestimation of state revenues. This overestimation, the council warns, would generate fiscal deficits that exceed initial projections, which could have serious consequences for the national economy. The Fiscal Council underscores that the average GDP growth should align more closely with the estimates from the Ministry of Economy and Finance (MEF), which places expectations between 2.3% and 2.6%. Ignoring this realistic framework poses considerable risk, especially in an environment where fiscal targets are frequently adjusted to the maximum allowed. According to the council, this approach increases the likelihood of non-compliance with the fiscal rules currently in place, putting the economy in a precarious situation. Projected increases in public spending for the years 2024 and 2025 are also a cause for concern. According to the council's analysis, this spending would be largely financed with temporary revenues, contradicting the need for fiscal consolidation. The premise that GDP will grow above its potential is considered irresponsible, as this expectation could negatively impact public finances in the near future. Furthermore, it is highlighted that the incoming administration would be forced to implement a stringent fiscal consolidation policy, with an adjustment of two percentage points of GDP over a period of just three years. This consolidation, the council warns, would occur in an unfavorable context, where a decrease in revenues is anticipated. This could result in stagnation in the real growth of spending, limiting the government's ability to respond to the social and economic needs of the country between 2026 and 2028. The lack of fiscal flexibility could jeopardize essential projects and generate tensions in governance. Additionally, it is noted that despite the recent relaxation of fiscal rules, meeting the deficit target set for 2024, which is 2.8% of GDP, presents a considerable challenge. With a cumulative deficit of 4% of GDP as of July this year, the situation becomes even more critical. Failing to meet this target for a second consecutive year would not only undermine the government's credibility but also complicate compliance with future fiscal projections. The implications of failing to meet fiscal targets are significant, especially in a context where economic prospects are negative and credit ratings have been downgraded in recent years. A cycle of non-compliance could further erode investor confidence and increase the likelihood of additional rating downgrades. The current situation places the country in a vulnerable position in the international markets, where the loss of investment grade could be imminent. In this sense, the MMM does not seem to offer the stability and reassurance that citizens and markets crave. On the contrary, the information presented by the Fiscal Council raises serious concerns about the country's financial future. The lack of a coherent and viable plan to address fiscal challenges could have lasting repercussions on the economy, affecting not only public accounts but also the quality of life of citizens. The growing concern of the Fiscal Council resonates with the sentiment of many economists and analysts who warn about the fragility of the current situation. The need for a responsible and conservative approach to economic projections is more urgent than ever. The government's ability to effectively manage its public finances will be crucial to avoiding a fiscal crisis that impacts all levels of society. In conclusion, the MMM, as it has been presented, raises more questions than answers in a context of economic uncertainty. The recommendation from the Fiscal Council to adopt a more cautious stance regarding growth projections is a call for reflection that should be taken into account by those designing the country's economic policy. Fiscal sustainability and credibility must be priorities on the national agenda if a more stable and prosperous future for all is to be built.