“On the ideology there is an ideology that I have: respect for economic rationality” said Teodora Cardoso, in Parliament, responding to critics its Board of Public Finance to promote biased analysis from the ideological point of view. The Budget and Finance Committee, who visited Tuesday morning, the economist was confronted with the defense of public spending cuts and strong fiscal adjustment. Last week, the PS, through the Deputy João Galamba even accused the CFP to base the analysis on “specific economic and budgetary doctrine.”
The President of the CFP did not like, he refuted, and went further “there is an element that I favor that is to do supply policy with demand policies”, ie Portugal needs structural reforms to increase competitiveness, need to reduce debt public not to risk finance crises, and not you need to base economic strategy stimuli for consumption and domestic demand. “If it’s ideology I assume is ideology” continued, generating the only time to jump in a quiet rest hearing, stressing that, regardless of different views and analysis, “above all is the economic rationale that has to be accepted.”
For Teodora Cardoso, demand-side policies failed in the past, and an inappropriate response to the competitive challenge facing the country and stood on a large scale with the opening of competition to the countries of Eastern Europe. Before I had already recalled the three principles that the CFP claims that should govern the fiscal adjustment process in heavily indebted countries, should be “strong” for “budgetary adjustments by small steps do not result”; They should be based “mainly on spending”; and “this adjustment on the expenditure side should focus on efficiency gains, especially in stricter expenses.”
The president of CFP shot so those who accuse the CFP to be part in the analysis, a criticism that came first the PS that last week after the opinion of the Council the macroeconomic scenario of the stability program, which found that the government remains optimistic, accused the institution of favoring austerity policies, remembering – as he had done in January – the CFP praised Vítor Gaspar cuts in 2012.
the socialist deputy was not present at the hearing, but this is a criticism that is heard on the left. The Left Bloc argued that the provisions of the Council on public finances and structural reforms, closely following the European Commission, involve “cut in state spending, deregulating the labor market and privatizing social security,” said Paulino Ascenção .
Stability Program better than budget maintains optimism
at the hearing on the Budget Committee Finance and Administrative Modernization, the CFP President argued that the program stability (PE) should be more prudent in growth forecasts and exports, and should also articulate better budget priorities with economic, warnings that were already part of the macroeconomic scenario analysis published a week ago. What is new is that the president of the supervisory institution of public accounts also sees positive developments against the budget: the government expects that investment and exports are the engines of growth, while the budget was priority given to consumption and domestic demand.
“There was a very significant improvement between what was the scenario underpinning the budget and the underlying stability program and this improvement relates to the growth. in fiscal scenario looked a lot more to domestic demand ( …). This has been changed in the stability program which gives much more emphasis on exports and investment, “he said in Parliament, warning however that lack of prudence in macroeconomic forecasts, particularly in the estimation of external demand is a risk that should have been safeguarded as it may affect investor confidence and may involve unpleasant surprises in the future. “the CFP also calls for better coordination between the National Reform Plan and the Stability Programme, which tomorrow will be discussed in parliament.
“to have this emphasis on investment and exports [as defined in the Stability Programme] structural measures are necessary that in principle the two documents could refer. It seemed to us that there was a failure in the link between politics and economic policy, “he said, cautioning that the final analysis of the CFP to the Stability Programme and the National Reform Plan will only be published in a few days, and that there still will do much analysis work.
the repairs were followed by the opposition, with Cecilia Meireles CDS to also want to know how the government will achieve the adjustment in spending that are proposed by 2020 and to question Teodora Cardoso on the possible need for a plan B adjustment this year. Margaret Balseiro Lopes, the PSD, in addition to growth forecasts, expressed concern about the risks in budget execution this year, pointing deviations in tax revenues and contributions revenue social.
the President of the CFP stressed that most of the warnings is about optimism in the projections also existed with other governments and stability programs, and considered that “it is too early” to see what is happen with the budget execution this year.
from the PS, Paulo Trigo Pereira defended the government’s accounts, noting that is the CFP, not the government, which currently has forecast higher growth private consumption, and arguing that the main destinations of Brazilian exports – Spain, Germany, France and the UK – are in an economic scenario to “run relatively well.” In Teodora Cardoso response reaffirmed that would like to see more caution because “there are uncertainties in all cases and uncertainty go in the same direction, it can be worse than is prediction.”
( news in updated at 15:21)
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