Who is accompanying Lula da Silva in this third term and what are the policies that the new government will apply in Brazil? Newspapers and analysts argue that the president in two messages from him on the day of his inauguration this Sunday, revealed what he hid during the campaign on his orientation of the economy and on that observation it does not produce peace of mind.
Estadao said the design brings back a more developmental vision with the State as a pillar of the economy.
Lula will have an enlarged cabinet: increased the number of ministries from 23 to 37in which he names figures with a symbolic tone and, in others, with a strong political profile.
In early December, Lula had already elected the former mayor of São Paulo, Fernando Haddad, as finance minister and famous diplomat Mauro Vieira, as chancellor.
An interesting fact is that the vice president will also be a minister. It is the case of Gerald Alckmin who will lead the Industry and Foreign Trade portfolio.
Alckmin, who was a member of the centre-right PSDB party and was a staunch opponent of Lula – they faced each other at the polls in 2006 – has shown in the past conservative positions. And it would be a letter to show that management will maintain a moderate attitude.
Speech, measures and doubts
However, Lula’s speech this Sunday generated questioning gestures.
Media and analysts accuse the new president of an alleged collision between tax liability and social assistance.
In that sense, it worries me Lula called the spending cap “stupidity”, that is to say, the legal limitation of public expenditure which has been in force since it was imposed by one of his allies, Henrique Meirelles, when he was minister of the economy in the transitional government of Michel Temer.
“At first, the president has promised to review more liberal policiessuch as labor reform and the privatization of state-owned companies, as well as bringing down what it called the ‘nonsense’ of the spending cap,” the newspaper wrote.
In fact, among his first measures, Lula passed a series of decrees to curb Bolsonaro-branded policies, such as making the purchase of weapons more flexible and the privatization of enterprises. He also reactivated the Amazon Fund.
However, the president did not detail what kind of alternative controls will be implemented in economic matters. His economy minister, Haddad, has said he will send to Congress a new rule earlier this year. “The logical extreme of this reasoning opens the way to qualifying the limitation of the growth of public spending as ‘stupid’,” said writer and analyst William Waack.
In the analysis of Elena Landau, in turn, who was an economist in the campaign of the then presidential candidate and now Minister of Urban Planning and the Budget, right-wing Senator Simone Tebetthe question of fiscal responsibility is still dubious, as it is difficult to reconcile it with the measures announced by Lula.
“It was a speech poor man As for the programmatic contentclarifying that it will use BNDES, Caixa and local governments for induce government spending without revenue”, said Otávio Vieira, managing partner of Nest Investimentos in Valor Económico more harshly.
This is a “very different tone than that of the lulinha peace and love of the first mandate”, twenty years ago, and it is closer to the interventionism of the second government of former PT president Dilma Rousseff, who succeeded Lula and ended up in crisis.
However, the reaction is somewhat exaggerated. The Folha de Sao Paulo newspaper remarked in its editorial that “it is not convenient to take ceremonies of this type as indicators of the course of the new government”.
He added that the main question being asked today is how far Lula will be willing to go at the political center to “ensure governance, maintain economic recovery and overcome sterile polarization.”
a double game
What that newspaper and other analysts point out is that there is a double game between history and reality. Centre-right parties associated with the new government were given ministries and they are far from the concept of socialism.
He cites in particular the case of right-wing Senator Simone Tebet, responsible the Planning portfolio, responsible for the budget and with an active voice in decisive measuressuch as the definition of a new tax control rule.
“During the election campaign, Tebet surrounded himself with liberal-minded economic advisers. A possible team with this orientation would be a clear counterpoint to the space of the economy ministerpetist, Fernando Haddad.
In this sense Waack observes that in truth “there is nothing surprising in President Lula’s first speech. It is perfectly in line as far as political tactics, that is present yourself as a savior. It is in line with what can be called the “general ideas” of PTism, including foreign policy.
For the chief economist of MB Associados, Sergio Vale, the interventions in Congress and the presidency were in line with what the president has already indicated. But he argued that “the difficulty is having an economy minister who gives similar signals”.
Haddad doesn’t appear to be the fiscal brake who was (Lula’s former finance minister, Antonio) Palocci in 2003”.
“It has been a series of indications on cap rule changes and labor reform that will raise concerns about what exactly will be done. Attention should be on a new tax framework and a tax reformbut Lula avoided these topics“, She said.
These analysts point this out Lula has suggested his interest in resuming the “reindustrialization” of the country, but noting that the State would correspond “to be the articulator of Brazilian industry to reach the 21st century. Like? With access to finance with ‘adequate costs’ with the resumption of subsidized credit with high costs for the exchequer”.
Two main axes
Lula’s speeches had two main axes, a harsh criticism of the past government of Jair Bolsonaro whom he accused of destroying the country’s economy and commitment to solve social inequality which was strengthened in the previous administration. In his messages, the new president harshly described his predecessor’s management.
“They have disorganized the governance of the economy, public funding, support for businesses, entrepreneurs and foreign trade. They squandered state-owned companies and public banks; handed over the national heritage. The country’s resources have been plundered to satisfy the stupidity of private tenant farmers and public company shareholders.
But for Landau, Bolsonaro has not made major structural changes. The former president was not a liberal nor did he feel very comfortable with those ideas, except in recent months, when he has tried to capitalize on the centrist vote in the elections with these proposals.
With the increased use of public banks, as is being attempted, there could be a negative effect on the capital market, the economist explained. In the near term, according to MAG Investments, investors should once again focus on the country’s tax issues.
The head of strategy of that consultancy, Patricia Pereira recalled that in a recent interview with the newspaper O Globo, she spoke of “doing things right” in the first year of governmentimplying that measures would come to counter the announced fiscal policy,
But he warned that “for now, all signs are of fiscal expansion. They need to show measures on the other line to change market expectations,” he concludes.
Along these lines, Fernando Siqueira, head of research at Guide Investimento, stated in a decisive tone that Lula’s interventions demonstrated, citing the use of state-owned companies as growth inducers and saying that the spending ceiling is “nonsense”, that continues to approach the legacy of Dilma Roussef’s government launch it is very negative for the markets. He predicted a backlash from investors.
“Lula praised Dilma’s government, which was disastrous, and the tone of her speech it makes one fear being an interventionist in state-owned companies,” he said.
Siqueira says none of this is new, but making these statements during the campaign is one thing, reaffirming them as president-elect carries more weight.
“Many people expected this he would moderate his speech after taking office, but it didn’t happen“, he said. According to him, the market still has room to react badly, especially in relation to the price of the spending cap.
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Source: Clarin
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.