Lula orders Haddad to articulate a new fiscal framework with Congress and economists

Minister Fernando Haddad, of Finance, said this Monday morning (20) that he will have to talk to the presidents of the Chamber and of the Senate, government leaders and economists to completely close the project of the new fiscal framework. The order to make some “adjustments” was given by President Luiz Inácio Lula da Silva (PT) last Friday (17) right after a meeting in which he received the text of the fiscal rule that will replace the spending cap mechanism.

According to the minister, the meetings with Arthur Lira (PP-AL) and Rodrigo Pacheco (PSD-MG) should be scheduled between the afternoon of this Monday (20) and Tuesday (21), so that parliamentarians and government leaders in Congress can take knowledge of the general lines of the new project.

“I think the president still intends to announce [oficialmente a nova regra fiscal] before the trip to China, on Saturday (20)”, he said without specifying whether the announcement will also take place before the next meeting of the Monetary Policy Committee (Copom), on Wednesday (22).

According to Haddad, the Copom has “its dynamics, we cannot overrule the conversation process [do arcabouço], because something solid has to come out, that makes sense to people”. He says that he delivered the project even earlier than expected – the deadline was the month of August – and that the president “authorized” the conversations about the new fiscal rule to be extended.

The need to articulate the project with Congress comes after party leaders criticized the secrecy kept by the economic team about the project. As revealed by People’s Gazette in early March, some parliamentarians considered the lack of a more open debate as a “political mistake”.

“At the very least, the government is wrong not to open this debate earlier. This shows that it will be very difficult to approve this fiscal anchor”, said federal deputy José Nelto (PP-AL).

Technical and political decision

The need to articulate the project with Congress and with economists comes days after the national president of the PT, Gleisi Hoffmann, stated that the government needs to increase public investment in times of low economic growth.

“If it is true that the economy will grow less this year according to indicators released by the government, then we need to increase public investment and not hold back any social investment. At times like this, fiscal policy has to be countercyclical, expansionist,” he said in a post on twitter.

Haddad minimized the statement made by the co-religionist, seen as a message for the project to be more flexible with public spending. According to the minister, President Lula’s decision on the new fiscal rule will be “technical and political, even more so a decision of this importance.”

However, he says that the economic slowdown cited by Gleisi “has nothing to do” with the new fiscal framework, but with the current economic situation in the country and the high interest rate. “We have to try to find the balance to reach what we want: economic growth, social justice and sustainability”, he added.

The minister’s expectation is to be able to forward the complementary law of the new fiscal rule by April 15, so that the draft of the 2024 Budgetary Guidelines Law (LDO) is prepared based on the provisions.