Brazil’s Finance Minister expresses uncertainty over fiscal package announcement this week Reuters
BRASILIA (Reuters) – Brazil’s Finance Minister Fernando Haddad said on Wednesday he was not sure if there was enough time to announce a spending package this week, adding that it would be released once President Luiz Inacio Lula da Silva agreed.
The market is eagerly awaiting new measures. Local financial concerns combined with fears of inflation related to US President-elect Donald Trump’s proposals have led to a devaluation and an increase in long-term interest rates in Brazil.
Speaking to reporters in Brasilia, Haddad emphasized that the package focuses on keeping costs under the same general law that governs the fiscal framework passed last year.
Such a framework includes the main budget targets for the year and the overall rate of expenditure growth of up to 2.5% above inflation.
“(This means costs) following the same law or the same thing, but achieving the same goal,” Haddad said.
Mandatory costs, such as pensions and other social benefits, have been rising above average, squeezing budget space for other costs, such as operating costs.
Economists warn these changes could make the new fiscal framework unsustainable within a few years, reducing its effectiveness in controlling rising public debt.
Haddad said the financial impact of the package is “huge” and reinforces the government’s commitment to fiscal rules established last year, but declined to discuss specific figures.
After a meeting with Defense Minister Jose Mucio early Wednesday, he said the government will consider adding other measures to the package.
His comments come amid reports that the government is planning to tighten military pension rules, which currently allow, for example, payments to relatives of service members discharged from the army.
Haddad spoke to the media after a meeting with the Speaker of the House of Commons, Arthur Lira, to whom he said he presented the “general framework” for the next steps.
