Pressure from Rui Costa for funds blocks new fiscal anchor in Planalto

The Minister of Finance, Fernando Haddad, will meet this Wednesday (29) with President Luiz Inácio Lula da Silva (PT) and with the Minister of the Civil House, Rui Costa, to present a new version of the fiscal anchor project , which will be filed in the National Congress to replace the spending cap (mechanism that limits the increase in government spending to the inflation of the previous year). The economic team’s project underwent a remodeling after Rui Costa asked for more resources to finance infrastructure works for the coming years.

Investments in infrastructure are a demand from the Chief of Staff, who will be responsible, for example, for coordinating the release of funds for the new Growth Acceleration Program (PAC), which will be renamed by the Executive. The assessment of members of the government is that the platform will be Rui Costa’s showcase over the next few years at the Planalto Palace.

Finance advisers, however, have been complaining behind the scenes of possible interference by the Civil House on the text discussed for the project that will replace the government spending cap. The arm wrestling was evident last week, after Haddad canceled his participation in a meeting after spending almost an hour waiting for Rui Costa at the Planalto Palace.

Members of the government’s economic wing defend that the proposal needs to pass credibility to the market and, therefore, defend greater control of expenses by the Executive. On the other hand, the political wing, linked to the Minister of the Civil House, argues that the government needs to release resources for various sectors, including infrastructure works.

“It’s a meeting, the president [Lula] already told me that it will be a conclusive meeting. Therefore, this week we are going to publicize it”, indicated Haddad this Tuesday (28) at the Planalto Palace. The project’s publicity has been expected since the beginning of March.

Rui Costa wants to expand his visibility with investments in infrastructure

The demand for more resources for investments in infrastructure came after Rui Costa was chosen by Lula to coordinate the new PAC. The program was supposed to be launched during the celebrations of 100 days of government, but it was postponed until the end of April due to the need for the Ministry of Finance to remodel the fiscal anchor proposal.

According to Rui Costa, the program will be focused on public-private partnerships (PPPs) and the conclusion of thousands of halted works across the country, in addition to the execution of new projects. “This investment plan will bring together federal direct investments from the Union’s public budget; investments through federal government concessions; and we are going to start what states and municipalities have been doing for some years now, which are PPP projects”, explained the Minister of the Civil House.

Given the lack of details on the fiscal proposal, the government has not yet disclosed how much it intends to spend on works in the new version of the program. In 2007, when the first version of the PAC was launched, planned investments at the time were half a trillion reais in areas such as transportation, energy, housing and sanitation.

An audit by the Federal Court of Auditors (TCU) carried out in 2019 concluded that 2,914 PAC works, equivalent to 21% of contracts, were paralyzed 12 years after the start of the program. “This means that, of the BRL 663 billion initially foreseen to be invested in the PAC, BRL 127 billion are linked to paralyzed works”, says an excerpt from the summary sheet of the survey.

So far, what is known is that the idea of ​​the new fiscal anchor is to have a lock to control spending, but take into account other factors, such as economic growth and the path of public debt. Members of the Treasury portfolio, however, fear that the desire for the release of funds from the political wing will end up making the proposal unfeasible with the market.

Haddad’s allies defend that the final decision on the calibration of the text will be given by Lula during the meeting with the Civil House. Until now, the petista has been publicly defending an expansion of the government’s investment capacity, in addition to preaching a strong presence of the State in the social area.

Civil House Minister performs operation to contain noise with Haddad

In order to try to reduce internal government disputes, Rui Costa visited the Minister of Finance last week. The meeting took place after Haddad abandoned the previous meeting due to the delay of the Chief of Staff.

The meeting, which was not initially on the agenda, lasted about 40 minutes and took place at the Treasury headquarters on the 23rd. In the end, the two ministers went down to speak with the press and posed for photos, together and smiling. “Attrition? Here, look at his smile, look at mine”, minimized Rui Costa.

The minister also said that the purpose of the meeting was “to work together for the Lula government to succeed”. “Working together for the Lula government to succeed. We are working hard and we are going in this partnership, for sure, [para] guarantee employment, income and that Brazil improves”, added Costa.

PT members claim that the meeting had the objective of “sealing the peace” and “dispelling the climate of distrust” that hit the nucleus of the government. The government supporters admit that the situation was inflamed by a series of leaks that had displeased Haddad and had been placed on the account of the Minister of the Civil House.

For PT leaders, the “friendly fire” between ministers is nothing new in this government and highlights the various wings of Lula’s party. The current dispute is seen internally as a repetition of what happened in the first Lula government, when the then Civil House Minister José Dirceu was the spokesman for the PT’s dissatisfaction with the economic policy of fiscal adjustment sponsored by former Minister Antônio Palocci.