SAO PAULO, Jan 22 (Reuters) - Brazilian government officials on Wednesday restated their dedication to balancing the public accounts, amid skepticism from financial markets regarding President Luiz Inacio Lula da Silva's administration's ability to meet fiscal goals.
Lula's chief of staff, Rui Costa, and Treasury Secretary Rogerio Ceron voiced support for fiscal equilibrium, indicating readiness to implement additional spending constraints if necessary to reach existing objectives.
The government reported ending last year with a deficit of 0.1% of gross domestic product, falling within its zero-deficit target with a margin tolerance of 0.25% of GDP on each side.
Despite meeting the previous year's targets, concerns linger about achieving future fiscal goals, exacerbated by analysts foreseeing an inclining debt trajectory dampening market confidence and pressuring Brazil's currency.
Costa reassured, "The president has consistently adhered to fiscal balance... We stand prepared to adjust as needed to honor our fiscal commitments. Government spending must align with revenue to prevent inflation and negative economic expectations."
Disappointing markets in late 2023, the weakening Brazilian real heightened inflation concerns and influenced the central bank's monetary policies.
Itau economists critiqued the government's fiscal strategy's faltering credibility in delivering sustainable fiscal paths over the medium term, even with strict adherence, observing a significant decline in trust.
However, Ceron defended the government's stance, rejecting market skepticism and reiterating their pledge to fiscal regulations. "Our major disagreement with the market is their belief in a substantial gap to reach this year's fiscal goals, necessitating new actions," Ceron stated on radio station Gaucha. "Rest assured, we will meet the targets. Any necessary actions will be taken. Our commitment to fiscal objectives is unwavering. We will achieve them, just as we did in 2024."
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