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.

JEL Classification: H62.