trip cancellation can anticipate announcement

The suspension of President Luiz Inácio Lula da Silva’s (PT) trip to China, for an indefinite period, caused the Minister of Finance, Fernando Haddad, to also cancel the trip. According to “Valor”, he should remain in Brasília in the coming days, which could bring forward the decision on the fiscal framework, the set of measures aimed at controlling public spending and preventing public debt from exploding.

The project for the new fiscal rule, which will replace the spending ceiling, should have been presented before the last meeting of the Monetary Policy Committee (Copom), which took place on the 21st and 22nd, and which decided to maintain the basic interest rate at 13.75% per annum.

Haddad’s initial intention was to disclose the rules before the Copom meets, as a way to influence a decision by the committee to signal the possibility of a reduction in the Selic rate. The project was sent to Lula on the 17th.

Allies are divided on the fiscal framework

There are divisions among Lula’s allies on the subject. The president of the PT, Gleisi Hoffmann, defended, last week, the need to increase public investments, defending more spending by the government, to face the slowdown of the economy.

Haddad has been reaffirming the importance of reducing the public deficit, which is forecast at 1.01% of GDP for this year, according to market expectations published in the Central Bank’s Focus bulletin. The framework would be added to other actions, such as the reinstatement of federal taxes on public accounts.

The proposal forwarded by the minister to Lula has the support of the mayor, Arthur Lira (PP-AL). To Reuters, he said that the approval of the text by Congress could open space for the “responsible reduction” of interest rates by the Central Bank.

Lira said that Haddad has been dialoguing and having difficulties, but has been trying to reach a balanced text. The parliamentarian believes that the vote on the framework can happen within a period of just 15 days after delivery. “You have a clear chance of voting in April.”