Haddad defends more spending against inequality – 12/14/2023 – Market

Minister Fernando Haddad (Finance) defended this Thursday (14), in a speech at the G20, that member countries must increase public investments to tackle the problem of inequality and boost the transition to sustainable energy sources.

According to the minister, energy transition policies need to be aware of their “socioeconomic consequences”.

“Countries need to increase fiscal space to support quality public investments that promote the structural transformations necessary to combat inequality and drive a fair global energy transition,” he said.

Haddad’s speech in defense of increased public spending contradicts the view that the majority wing of the PT has of the Finance Minister. PT members have said that Haddad is carrying out a “fiscal austericide” by proposing a reduction in state investments to eliminate the fiscal deficit in 2024.

The criticism against Haddad’s fiscal policy was documented in a PT resolution, released last week. “Brazil needs to urgently free itself from the dictatorship of the BC [Banco Central] ‘independent’ and fiscal austericide, or we will not be able to respond to the country’s needs”, says an excerpt from the document.

In the party’s internal debate, Haddad presented another view: “It’s not true that a deficit causes growth,” he said. “There is no such correspondence. That’s not how it works. It depends.”

The minister has said more than once that there is no silver bullet to solve the country’s economic problems and that constant work needs to be done to “tighten the screws”.

At the G20, Haddad also stated that the international tax agenda must be more robust than the BEPS (Base Erosion and Profit Transfer, in Portuguese) negotiations underway at the OECD (Organization for Economic Cooperation and Development).

BEPS are a tax planning scheme practiced by multinational companies or economic groups to take advantage of gaps in rules in national tax systems to transfer profits to low-tax countries. Since 2013, the OECD has been discussing ways to mitigate the problems caused by this erosion of the tax base.

In a speech aligned with the Lula government’s domestic economic policy, Haddad also defended the expansion of the international tax agenda and said that, with Brazil as president of the G20, it will seek changes in the international fiscal vision, to include the taxation of wealth.

“We hear increasingly loud voices from the Global South and civil society demanding a more ambitious international tax agenda, including wealth taxation, greater transparency and other solutions to make the world’s richest pay their fair share in taxes .”.

The minister also said that he wants to “improve the efficiency of financial flows” to countries that need more resources to protect strategic environmental assets and achieve their decarbonization goals.

“For this reason, we need to carefully review the functioning of existing major climate funds, as well as continue discussions on the regulatory environment that will enable massive resource flows to the Global South.”

Haddad’s statements were made at the opening of the meeting of the G20 financial group, which deals with strategic macroeconomic issues and is led by the Finance Ministers and Presidents of the Central Banks of the member countries.

The coordinator is the Secretary of International Affairs of the Ministry of Finance, Tatiana Rosito.

On December 1st, Brazil assumed the temporary Presidency of the G20 – a group that brings together the 19 main economies in the world, the European Union and the African Union. The guest list includes Angola, Egypt, United Arab Emirates, Spain, Nigeria, Norway, Portugal and Singapore.

The work in Brazil began on Monday (11) at the Itamaraty Palace, in Brasília, with a meeting between the group of Sherpas (official representatives of the leaders of the member countries) with members of the other countries in the group, as well as other nations and institutions invited by the Brazilian presidency.

Members of this track are responsible for supervising negotiations and discussing the points that form the summit agenda.

At the opening meeting, Ambassador Maurício Lyrio, Secretary of Economic and Financial Affairs at the Ministry of Foreign Affairs, emphasized the priorities of the Brazilian presidency: combating hunger, poverty and inequality, sustainable development and the reform of global governance.

On Wednesday (13), President Luiz Inácio Lula da Silva (PT) met with representatives of the two tracks (Sherpa and Finance). At the meeting, the head of the Executive suggested the creation of an international taxation mechanism to finance sustainable development and criticized bureaucracies in access to environmental funds.

In previous summits, the joint meeting of the two tracks only took place at the end of the G20 work. For the first time, the meeting of Sherpas and Finance was held at the beginning of the activities.

Brazil will organize more than 100 working group meetings throughout the mandate, which ends on November 30, 2024.

The meetings will be held in 13 host cities – Brasília, Belém, Belo Horizonte, Fortaleza, Foz de Iguaçu, Maceió, Manaus, Porto Alegre, Rio de Janeiro, São Paulo, Salvador, São Luís and Teresina.

The last event will be the Leaders Summit, in Rio de Janeiro, on November 18th and 19th, 2024.