Haddad says that Bolsonaro’s electoral measures generated high interest rates and a slowdown in the economy, but he does not see a recession

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Finance Minister Fernando Haddad said this Thursday (2) that the slowdown in the economy in 2022 is related to a reaction by the Central Bank to the attitudes of the Bolsonaro government, which increased spending in an election year. “An obvious reason that there was a reaction by the Central Bank to the attitudes of the previous government in the electoral period, which gave rise to an increase in the interest rate, which explains this deceleration”, he declared. Last year, the Central Bank raised the economy’s basic interest rate from 9.25% and ended the year at 13.75% per annum — the highest level in more than six years — to combat inflationary pressures. Inflation rose in Brazil amid the Covid-19 pandemic, which led to a lack of some products and limited services, the war in Ukraine (which led to an increase in food and fuel prices) and, also, an increase in public spending. In July 2022, the Bolsonaro government approved the so-called PEC Kamikaze in the National Congress, which changed the Constitution (allowing the spending ceiling to be breached) and created a state of emergency on the eve of the election. The measure allowed the previous government to circumvent laws to create social benefits in an election year, which is prohibited. The cost was estimated at BRL 41 billion

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