ABSTRACT
This paper provides a critical evaluation of some aspects of the recent debate on fiscal policy in Brazil. It argues that orthodox as well as heterodox analyses of the size of the fiscal deficit tend to incur conceptual or factual errors that seriously obstruct an adequate understanding of the issues involved. A mistaken comprehension of certain basic concepts and even a tendency to disregard available statistical information are shown to be some of the main causes of the inconclusive nature of the discussions about the state of public finance in Brazil. Section I examines the conceptual difficulties involved in the application of the concept of public sector borrowing requirements as defined in the IMF programme for Brazil. Section II discusses the validity of the statistics on the public sector’s “operational” deficit and the assumption that public finances are now basically under control. The final section summarizes the main conclusions.
KEYWORDS:
Fiscal policy; defict