Haddad: Treasury will be ready to release tax package on Monday or Tuesday

Amid widespread expectations in the financial market regarding the release of the federal government’s spending cut package, the Minister of Finance, Fernando Haddad (PT)stated, in the early evening of this Thursday (21), that the measures should be announced at the beginning of next week – probably, on Monday (25) or Tuesday (26).

The statements were made by Haddad in a quick press conference outside the Ministry of Finance, in Brasília (DF). According to the minister, a final meeting with the president is scheduled Luiz Inácio Lula da Silva (PT)at Palácio do Planalto, to bang the gavel.

Haddad also said that the current volume of expenses requires blocking public accounts, which should reach something around R$5 billion.

“On Monday morning, we will draft the acts that were drafted by the Civil House. Let’s hit him (Lula) the drafting of one or another detail, including the agreement that was made with the Defense, which he only learned about informally from me today. With the end of Monday’s meeting, we will be ready to release. The decision whether we will do this on Monday or Tuesday is a decision that communication will make, but the acts have already been drafted”, said the head of the economic team.

Still according to Haddad, most of the measures have already been shared with the presidents of the Chamber of Deputies, Arthur Lira (PP-AL)and the Senate, Rodrigo Pacheco (PSD-MG).

“We have already advanced some measures for some parliamentarians, some leaders, for the presidents of both Houses themselves. He (tax package) is enough to reinforce the fiscal framework, which has an excellent rule for us to aim for budget balance and work on the debt trajectory, the resumption at some point of the fall in interest rates, so that we have the peace of mind to continue growing with inflation within the target , aiming at the center”, stated the Minister of Finance.

In the conversation with journalists, Haddad reaffirmed his optimism regarding the government’s primary result this year. “There will be no change in the primary result target. And we are practically in the last month of the year convinced that we are capable of meeting the target established in the LDO (Budget Guidelines Law) from last year”, he concluded.

This Thursday, the Ibovespa, the reference index for the Brazilian stock market, fell 0.99%, to 126,922.11 points, having marked 128,196.63 at the maximum and 126,593.85 at the minimum of the day, the lowest intraday level since the 7th of August. The financial volume totaled R$22.06 billion.

The indicator closed under pressure from the negative performance of large banks and amid market skepticism in relation to the spending cut package promised by the federal government.

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The spending cut is expected to be announced in the coming days. There are still meetings that need to be held with President Luiz Inácio Lula da Silva (PT) to agree final details

Comings and goings

Discussions about the Lula government’s spending cut package have already entered their fourth week, without any announcement so far.

The week before last, Lula had practically daily meetings to discuss the issue. At the time, the president asked Haddad to postpone an official trip to Europe to remain in Brasília (DF) and participate in meetings on the fiscal package with other ministries.

One of the alternatives being analyzed by the economic team is to “redesign” the salary bonus (a type of 13th salary paid to formal workers who receive up to two minimum wages).

Government members estimate that the benefit – which will cost R$30.7 billion in 2025 – could be more concentrated on the poorest. According to current rules, an increasing number of people have benefited from the bonus, which is driven by the policy of increasing the minimum wage.

On the other hand, the decoupling of social benefits, such as the bonus and the Continuous Payment Benefit (BPC), in relation to the minimum wage, has been ruled out by the government.

There are still those who defend, in the economic team, that the health and education floors be changed, but the measure does not have the sympathy of Lula and ministers in the government’s social area.

One of the pillars of the measures presented by the Ministry of Finance to Lula would be the adoption of instruments that would help optimize the review of social policies, minimizing possible irregularities. One of the ideas raised is the requirement for biometrics.

Another important step would be to expand the target audience for the review, previously restricted to people whose registration is more than 48 months out of date. With the expansion, this time would be reduced to 24 months.

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For Caio Megale, the main objective of the measures should be to slow down spending growth

Expectations from market analysts

According to the 59th round of the Power Barometersurvey carried out by InfoMoney with some of the main consultancies and political analysts operating in Brazil, the projections of 16 of the 17 experts consulted for the fiscal impact of the measures range from R$10 billion to R$50 billion — a level of dispersion that indicates the degree of uncertainty at the moment .

The survey shows that the average bet by political analysts was R$ 29.94 billion in savings generated with possible actions not yet announced. The number is practically the same as the median: R$30 billion. One of the participating consultancies chose not to answer this question.

The financial market anxiously awaits the presentation of a package of expense control measures promised by the federal government for after the municipal elections. The idea is that the set of actions will help point to the sustainability of the new fiscal framework and reduce the level of fiscal skepticism among economic agents observed in recent weeks.

The Executive Branch must focus on initiatives that contain the evolution of expenditures classified as mandatory, which account for more than 90% of the Federal Budget and each year grow above the limit of 2.5% real established by the fiscal framework (which requires making increasingly greater cuts in discretionary spending, which includes public investments).

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