“Iof’s return and return is due to the government’s dilemma between tidying up the house and reelecting Lula”

MB Associados Chief economist Sérgio Vale attributes the confusion of IOF, which the country watched between Thursday and Friday, to a dispute within the federal government, between Finance Minister Fernando Haddad, and members of the political wing.

Also read: Doubt, instability and volatility: the impact of the IOF package, according to analysts

“A group within the palace aims to grow for the president’s reelection next year, while Minister Fernando Haddad does what is possible to hold this very fragile tax framework we have,” Vale told Vale to Infomoney.

In the assessment of the chief economist, Haddad has been fragile since at least the end of last year, when the first microecomic measurements began to seem and he was losing space.

“The great government’s dilemma at this time is that it needs to get the house, but at the same time, it needs to reelect the president. The government will experience it next one and a half,” explains the economist

“It has been growing strong last year, low unemployment rate, inflation is not out of control. In general, it was for popularity (from Lula) to be larger and is not,” says Vale.

Run -over decision

It is worth evaluating that the federal government’s decision on IOF was poorly thought, launched in a run over, and therefore the government, as sometimes had to go back.

Also read: The “cold water bucket” that tax risks brought after strong market euphoria

According to Vale, this is an issue that has been repeated frequently. “The government puts measures that are often contested by the market, because they do not make much economic sense,” he says.

In this last episode, according to Vale, the market has made a correct reading that it was a bad measure, because it gives the impression of having some kind of capital control, when the government moves the fare over external financial movements.

However, “the government realized the error and focused on domestic instruments to restrict this greater impact of negative perception.”

For Vale, this has happened other times with measures that were poorly announced, such as Pix, for example, and the government had to retreat. “This heads head also has to do with divergent positions from the Ministry of Finance with others around the president, such as the Civil House. It has a scenario of a government that is not unified in its decisions,” he says.