The current context in Brazil imposes a series of challenges for the administration of public finances in the country, but this is not always clear for everyone. Therefore, the Department of Public Policy Analysis (DAPP) of Fundação Getulio Vargas launched this week a new tool for keeping track of the fiscal situation of the federal government, the Fiscal Compass.
The platform, which presents official public data translated into a clear and interactive language, is another undertaking by the area of Budgetary Transparency at FGV/DAPP. The metaphor of the compass comes from understanding that the fiscal management of the federal government follows a certain route, establishing a destination it wants to reach — known as the fiscal goal. In this sense, the Fiscal Compass is an instrument that helps users know, along the course, whether the country is in the right path to reach the goal.
If the country is not in the right path, changes in the route must be made in order to return to the pre-established trajectory. Given the fiscal goal, the government adjusts the global limit of primary expenditures according to the progress of tax collection. The government may also change taxes or choose to establish a more flexible goal for the year.
— The Fiscal Compass is an undertaking which illustrates DAPP’s ongoing efforts to develop tools for data visualization and analyses which facilitate understanding and keeping track of the destination of public resources. With this new platform, we seek to present the trajectory of the federal government towards the fiscal goal in a didactic way, which is a challenge in the current context of crises — states the director of DAPP, Marco Aurelio Ruediger.
How does it work?
Browsing the tool is guided by a history to be told in chronological order. Each time the government issues a decree for financial scheduling, we have a picture of how the tax collection behaved until that moment and how the government reacted based on that, which can be seen by browsing the historic series.
By browsing the historic series, we see the rest of the screen react: on the top, we have the big numbers of the budget expectation for the year (income, expenditures and result), whose behavior results in the movement of the compass. Whenever the compass moves, there are indications of a discrepancy in relation to the expected fiscal goal, which may (or may not) be corrected at another point in time, either by increasing taxes, decreasing expenditures or by changing the goal itself.
— At this moment, when the budget is tight and we need to enter a recovery cycle, the fiscal choices are always very difficult. The idea of this tool is to make the process and the context in which these choices are made more transparent. We believe that the population must not only be notified of these public decisions, but also be aware of why they are being made — explains FGV/DAPP researcher Andressa Falconiery.