Haddad cancels trip to Europe amid pressure to advance tax package

The Minister of Finance, Fernando Haddadcanceled a trip to Europe this week, at the request of President Lula, the ministry’s communications department said this Sunday (3).

The minister was expected to be out of the country from Monday until the early hours of Saturday (9). With the change in agenda, Haddad will be in Brasília over the next week, “dedicated to domestic issues”, said the statement.

The change in the minister’s plans comes in the wake of market pressure for progress in the spending review proposal that the economic team promised to define after the municipal elections.

Last Thursday, Haddad had stated that a week’s delay in presenting the package would not harm the review and, on the contrary, would allow the quality of the work to be improved. However, the market’s negative perception of public accounts, combined with pressure from abroad, continued to take its toll.

On Friday, DI interest rates rose again and the dollar reached its second highest price in history.

This week, the minister confirmed that the measures will need to be approved through a Proposed Amendment to the Constitution (PEC), but did not give details about the measures or specify when they will be announced.

According to the newspaper The Globethe government works on three fronts, one of which is change of mandatory expenseswhich account for more than 90% of the federal budget and have compressed the space for spending on investments and funding the public sector.

In this area, one of the measures under study is to relax the obligation to transfer funds, such as the National Fund for Scientific and Technological Development (FNDCT), and create a limit of 2.5% above inflation for the growth of some expenses. It is also discussed whether this will be a global limit for mandatory expenses or an individual limit for some expenses.

Other fronts involve the changing public policies considered expensivesuch as unemployment insurance and salary bonuses, in addition to control the payment flow for specific benefitssuch as ProAgro and defense insurance.

Several of these measures had already been brought forward in July by the InfoMoney.