What liberal economists who supported Lula in 2022 say today

Liberal economists who supported Luiz Inácio Lula da Silva (PT) in the second round of the 2022 presidential elections, in the confrontation with then president Jair Bolsonaro (PL), are today skeptical about the PT’s economic policy in his third term.

Outdated views regarding the economy, lack of concern about fiscal issues and attacks on Central Bank policy are some of the main criticisms made by supporters. Check out what Pedro Malan, Elena Landau, Armínio Fraga, Pérsio Arida and Henrique Meirelles say below – the only one in the group with a favorable view of the government.

Pedro Malan: government has the vision of 15 years ago

One of the most critical and who supported Lula in the second round is the former Minister of Finance in the Fernando Henrique Cardoso government and one of the fathers of the Real Plan, Pedro Malan. In an article published in the second week of February in “O Estado de S. Paulo”, he points out that thinking from 15 years ago still prevails in the government.

According to him, the State has already burdened itself with obligations that test the limits of its capacity. “By dispersing its activities too much, the State becomes more susceptible to giving in to isolated interests, to persisting in promises that it cannot fulfill.”

The former minister emphasizes that, over the next three years, it will be essential “in a clear and credible manner, to signal to economic agents that there is a system of fiscal responsibility rules that represents a firm commitment to ensuring the sustainability of the trajectory of public finances from the country.”

Malan highlights that there is a lack of a system of fiscal rules in the country, even despite the efforts of the Minister of Finance, Fernando Haddad, against friendly fire from members of the government and his party. “An unsustainable fiscal policy can impede sustained economic and social development in the long term.”

Elena Landau: industrial policy is bad and has backward ideas

Criticism also comes from economist Elena Landau, who was once president of the National Bank for Economic and Social Development (BNDES) and coordinated the economic area of ​​the MDB candidate for president, Simone Tebet.

She assessed the Nova Indústria Brasil program, launched by Lula in January to allocate R$300 million to the sector by 2026, as being bad and having late ideas. She told “Folha de S. Paulo” that, just as Lula planted the “disaster” of Dilma’s governments in 2010, the president is “planting the disaster again” of his successor in the Planalto.

According to the economist, the philosophy of industrial policy is the same as always. “Protected economy, subsidy, electing certain sectors. So, as a design it’s bad.” The economist also considers that the problem in Brazil is not the lack of financing, but rather the lack of legal security.

Arminio Fraga: Lula tripped Haddad

Another economist who supported President Luiz Inácio Lula da Silva (PT) during the electoral campaign, especially in the second round, was the former president of the Central Bank during the Fernando Henrique government and partner at Gávea Investimentos, Armínio Fraga. The support was related to the composition of Congress, more conservative and more favorable to Jair Bolsonaro.

Fraga pointed out, in an interview with ” Veja ” at the end of last year, that one of the main concerns regarding Lula’s economic policy is the fiscal issue. Data from the Central Bank (BC) show that the economy went from a positive primary result of 1.25% of GDP in 2022 to a deficit of 2.29% in 2023. Public debt went from 71.6% of GDP to 74 .3% of GDP.

“Clearly he [Lula] tripped the minister [Haddad] in a situation that already had difficulties, that already came from way back,” he stated. “The path of fiscal mess is tragic and now it has been tripped up. Analysts already expected this difficulty, especially because the spending side has been growing for decades in Brazil, and cannot enter into the equation. He was excluded by decision of the government, I assume by the president himself.”

Fraga assessed that Haddad’s management of the economy is not easy, but that he pointed “Brazil in the right direction.” He points out that the Minister of Finance kind of got on the bus and changed the direction. He pointed in the right direction, but he still didn’t go far.

“I think he’s facing friendly fire, which he faced at the beginning and in the transition as well. And I think he’s trying, but it’s not easy for him.”

In October, during the Parati Literary Fair (Flip), he told “O Globo” that a well-organized government can grow between 3% and 4% per year. But he assessed that this is not the case for the current government. “It could be, but I think it’s unlikely,” he said. The median projections of the Central Bank’s latest Focus report, released this Tuesday (6), point to growth of 1.77% in 2024.

Pérsio Arida: setbacks in different areas

Another Lula supporter who expressed criticism of his economic policy was the economist Pérsio Arida, another of the fathers of the Plano Real. He stated, in 2022, that Bolsonaro was a risk to the country’s institutional instability.

In an interview with “Valor”, Arida pointed out setbacks in the environmental agenda and foreign policy. He also expressed criticism regarding the attacks made by the president and figures close to the Central Bank and the attempt to review the rules of the legal framework for sanitation.

Arida was also one of the supporters of the manifesto for the approval of the tax reform, which brought together, in November, economists with heterogeneous and antagonistic thoughts, such as former PT minister Guido Mantega – who during the Dilma government insisted on a policy of reinforcing public spending to encourage the economy – and Marcos Mendes, critic of Lula and one of those responsible for drafting the Spending Ceiling.

Henrique Meirelles: praise for Haddad

Former president of the Central Bank in Lula’s first two terms and Minister of Finance in the government of Michel Temer (MDB), Henrique Meirelles supported the PT member in the 2022 second round, but cast doubt on his economic policy even before taking office. He said that the country could have a “recessionary climate” if there were no limits on the extra spending that the newly elected president requested and criticized the PT’s attempt to block the appointment of Ilan Goldfajn to the Inter-American Development Bank (IDB).

In February 2023, with Lula already in the Presidency, Meirelles criticized the PT member’s attacks on the Central Bank and its interest rate policy. Then, in May, he regretted the exchange of the spending ceiling – created during Meirelles’ administration at the Treasury – for the new fiscal framework, which he classified as “complex” and “difficult to execute”. Furthermore: he said that the president had announced, shortly after the election, “a policy in line with that of former president Dilma’s government, which led Brazil into a very large recession.” “It’s a risk we take,” he said.

More recently, however, Meirelles praised the work of the Ministry of Finance. Referring to Congress’ pressure for parliamentary amendments, a movement that he considered “legitimate and constitutional, but dangerous”, he praised what he classified as the “commitment” of the department led by Fernando Haddad.

In an article in the newspaper “O Estado de S. Paulo” at the beginning of the month, Meirelles said that the pressure on the government would be unbearable if the Ministry of Finance did not remain firm in the pursuit of zero deficit this year, despite market distrust and of the work of politicians.

“The commitment to zero deficit is a sign of the Treasury’s commitment, which gives a positive signal to the market and slows down the impetus of Congress and the public sector for spending,” he wrote.