In a harsh speech that rocked Brazilian markets with a drop in the stock market and a rise in the dollar, President-elect Luiz Inácio Lula da Silva, criticized the request for “fiscal stability” and protested against the limit on public spending.
In a message to Brasilia, the first to offer in the transition, he also rejected the new privatizations and stressed that it is necessary to give priority to social issues over those “which only concern the financial market”.
Investors automatically reacted to the speech. Over the course of the day, the stock market recorded steep declines reaching 4.09% before cutting back to around 3%. The dollar, in turn, which had been circulating quietly since Lula had won the elections, it jumped 4.14% and closed up 3.14% against the real.
“Why are people made to suffer to ensure the fiscal stability of this country? Why do people always say that you have to cut expenses, that you have to have a surplus, that you have to put a cap on expenses? Why don’t the same people who discuss spending limits seriously discuss the social question in this country? ” asked the president-elect in his message to the Banco do Brasil Cultural Center, where the transition team of the new Executive works.
No to privatizations
There he also claimed that “Brazilian public companies will be respectedAnd stressed that the Federal Economic Fund and the Bank of Brazil will not be privatized and that Petrobras will not be fragmented, a project encouraged by the outgoing government of Jair Bolsonaro which involved a gigantic investment in that operation.
He also stated that the BNDES, the Development Bank, “will once again be an investment bank for small and medium-sized entrepreneurs”.
According to the new president, it is necessary to change the methods and notions regarding public power spending. “Many things that are considered to be spent in this country, they should be seen as investments. It is not possible that the money was cut by the popular pharmacy in the name of achieving the tax goal, respecting the golden rule, ”she said.
Critics of the uncontrolled expansion of spending, on the other hand, argue that fiscal responsibility is what makes it possible to guarantee social spending.
The PT leader was also accused the provisional reform of the Bolsonaro governmentbut also against the changes to the labor legislation made during the transitional administration of Michel Temer.
what’s coming
Lula will take office on January 1, 2023. This Thursday he confirmed it will announce the name of the head of the economic area only in December, news that the market is looking forward to. In his two previous governments and with a liberal economist in his portfolio, Antonio Palocci, the elected president obtained eight years of fiscal surplus, an achievement that he used persistently in the electoral campaign.
He also recalled those results in his speech, so that the message generated surprise and doubt.
Lula got excited and had to interrupt his words when he quoted a fragment of the speech he gave in his victory in 2002, commenting on the theme of hunger, which returned to the national agenda. “Yes, when this mandate ends, all Brazilians are drinking coffee, having lunch and dinner, I will have played my role again “She said.
The president-elect won the election on October 30 with a difference of just 1.8% against Bolsonaro. The allies of the outgoing president control the first two minorities in Parliament and in the main states of the country, São Paulo, Rio de Janeiro and Minas Gerais.
To ensure its governability, Lula and her people are already negotiating with different parties, mostly liberals and conservatives, whose parliamentary votes will be needed by the new government. This Thursday’s speech is unclear how it will affect these efforts.
In Brazil, there is a legal ceiling on public spending which has been promoted by the Ministry of Economy by Temer, the former president of the Central Bank, Henrique Meirelles, a close ally of Lula da Silva, and one of the names in speculation for the minister of ‘Economy. Lula does not matter with enough lawmakers of their own to remove that ceiling.
Next year the new government will have to solve a tax bomb that will be left by the Bolsonaro administration, which at most will require about 70 billion dollarsaccording to the Getulio Vargas Foundation.
Meirelles said a license could be agreed for a spending cap of up to $ 20 billion, but maintaining social plans for the poorest segments alone would cost about $ 14 billion. So the PT calculates a license of at least $ 40 billion.
It has also been in force in Brazil since last year. a law that protects the independence of the Central Bank. Lula argued in the campaign, against the opinion of the PT, that he will not touch that legislation.
Source: EFE, AP and Clarin
PB
Source: Clarin
