Haddad denies split in government over new tax rule – 03/20/2023 – Market

Minister Fernando Haddad (Finance) denied this Monday (20) that the political and economic wings of the Luiz Inácio Lula da Silva (PT) government are divided in relation to the proposed new fiscal rule to replace the spending ceiling. According to him, “every decision is technical and political”.

“I don’t see this division in the government, political wing and economic wing, I don’t even know what it is, I was a candidate for the Presidency of the Republic for the Workers’ Party. Which wing do I belong to? This type of division makes no sense, every decision is technical and policy, even more so a decision of this importance, which is why it is the President of the Republic who has the last word,” he said.

Amidst the discussions, the PT is pressing for the new fiscal framework not to imply drastic cuts in areas considered sensitive by party leaders. The expectation of ministers from the wing considered more political in the government is that the new fiscal rule is not so strict as to bar investment in public works, considered important for the performance of the Lula administration.

This Monday, the president of the BNDES (National Bank for Economic and Social Development), Aloizio Mercadante, promised “total loyalty and partnership” to Haddad in the discussion on the new fiscal framework. However, he said he wouldn’t stop expressing what he thinks.

“We are waiting for the new fiscal framework. Minister Haddad can expect total loyalty and partnership from me and the bank, contrary to the speculation that is published. We are not here for any other reason. He has no expectation of replacing anyone, much less of competing” , he stated.

“Now, don’t ask us to stop saying what we think to help the government to get it right, to find the best path, to seek the best practices. That’s what we’re here for”, he added.

On Saturday (18), the president of the PT, Gleisi Hoffmann (PR), published a message on social networks defending the need to increase public investments. This means that the proposed new fiscal framework should be flexible in relation to certain expenses, according to her.

According to Haddad, the economic area is giving Lula “all possible subsidies” so that the president’s decision contemplates his historic commitments, his campaign promises and also guarantees the sustainability of public accounts.

The minister also said this Monday that he will hold “pre-preparatory meetings” earlier this week with the presidents of the Senate, Rodrigo Pacheco (PSD-MG), and of the Chamber, Arthur Lira (PP-AL), with leaders of the National Congress, in addition to of meetings with economists to expand discussions on the fiscal rule.

The head of the Treasury confirmed the guidance given by President Lula after the meeting held at the Planalto Palace last Friday (17), as anticipated by the Sheet.

“The president [Lula] advised that before the official announcement some important conversations be held with the presidents of the two Houses [Arthur Lira, da Câmara, e Rodrigo Pacheco, do Senado]with the leaders, with some non-market economists to avoid contagion, privileged information, these things that we have to protect”, he said.

“And also that we could talk to Jaques Wagner, [José] Guimarães, with the leader of the government in Congress [senador Randolfe Rodrigues]. Let’s schedule today [segunda] these meetings that should take place between today [segunda] it’s tomorrow [terça]”, he added.

Shortly after Haddad’s statement, the minister’s official agenda was updated. Among the new commitments scheduled this Monday morning are meetings on the fiscal rule with federal deputy José Guimarães, leader of the government in the Chamber, and with senator Jaques Wagner, leader of the government in the Senate.

According to Haddad, Lula still intends to announce the design of the new fiscal rule before his trip to China, scheduled for the 25th.

The minister previously stated that he would like to present the proposal before the next meeting of the Copom (Monetary Policy Committee), scheduled for Tuesday (21) and Wednesday (22). This is because the government hopes that the new fiscal rule will make room for the BC to anticipate the start of the interest rate cut – today the basic rate (Selic) is at 13.75% per year.

Asked about the deadline, Haddad highlighted the difference between the agendas of the government and the monetary authority. “Copom has its dynamics, we cannot also run over the conversation process because something solid has to come out, something sober, something that makes sense to people and it will not be haste that will lead us to this situation”, he said. . “I already anticipated from August to March, until mid-March, we didn’t even arrive at the end of March and it was already delivered to President Lula.”

According to the head of the Treasury, the announcement of the new tax rule was brought forward to March so that the PLDO (Budget Guidelines Bill) is forwarded to the National Congress already based on the new tax rule.

The LDO project must be sent to the Executive for Congress by April 15 of each year, and be returned for sanction by July 17 of the same year.