Lula’s government should have a new meeting on the fiscal rule on Monday – 03/17/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) should have a new meeting next Monday (21) to discuss the proposed fiscal rule, whose details were presented to the president this Friday (17).

The topic should be discussed within the scope of the JEO (Budget Execution Board), formed by ministers Fernando Haddad (Finance), Simone Tebet (Planning and Budget), Rui Costa (Casa Civil) and Esther Dweck (Management and Innovation in Public Services). .

The JEO meeting was convened to validate the first evaluation report of the Lula administration’s Budget, which needs to be delivered on Tuesday (22). But there is an expectation that the meeting will also serve to continue the debate on the new fiscal framework, which will replace the spending ceiling — a rule that limits expenditure growth to inflation variation.

Lula’s intention is to announce the proposal next week, before his trip to China, scheduled for March 25th.

The general lines of the new fiscal rule project were taken by Haddad to the president still on Tuesday (14), but the details were left to be presented in a broader meeting this Friday, with the presence of Tebet, Dweck, Rui Costa and by the vice-president and minister of Development, Industry, Commerce and Services, Geraldo Alckmin (PSB).

The meeting, held in the afternoon at the Planalto Palace, lasted almost three hours. There was no announcement, and none of the ministers made statements after the end of the meeting, maintaining the secrecy that has surrounded discussions of the proposal.

Technicians called to provide support in resolving doubts were left outside, according to reports. Dialogue with the president was restricted to ministers.

Before the meeting, Haddad said that a decision on an eventual announcement would be up to Lula. “It’s in his hands now. It’s his decision. The Treasury met its schedule. We’re going to deliver the scenarios to the president, and he forwards them,” he said.

On Tuesday, the Minister of the Civil House had already signaled that the issue of the fiscal rule could be taken to the JEO. “A meeting is scheduled with the Budget Board to discuss the fiscal framework proposal and then it will be submitted to the president so that, after the president’s approval, we can forward it to the National Congress”, he said. Throughout the week, however, the option was to advance the details of the rule to Lula.

In an attempt to avoid leaks, the Minister of Finance has restricted access to the project. In the folder itself, only some of its main secretaries participate in the negotiations. The aim is to convince Lula of the importance and terms of the proposal before it is targeted by criticism.

Members of the government claim in a reserved manner that Haddad intends to keep the proposal confidential to avoid the risk of attrition, since Lula must request changes if he considers the proposal too rigorous.

As shown to SheetLula fears being accused of electoral embezzlement after running a campaign permeated by promises to put the poor in the Budget and put an end to the current ceiling —a rule that limits the advance of spending to inflation and, in the PT’s evaluation, limits expenses with works and policies social.

Some signs already given by the economic team go precisely in the direction of maintaining some control over the growth of expenses, albeit more flexible than the ceiling. Therefore, palace advisors are betting on changes in the text presented by Haddad.

In this context, a possible leak of the Treasury’s proposal would show a new defeat for the minister, if any of the provisions are in fact rejected by the Planalto Palace.