The president’s government (PT) will close this Thursday (7) the spending cut package that has been discussed in recent weeks and which has already had ministers notified of the impacts on their respective portfolios. The last “two details” that remain to be resolved will be discussed in a meeting at 9:30 am with the economic team.
According to Lula’s official agenda, Simone Tebet (Planning), Esther Dweck (Management and Innovation in Public Services) and Rui Costa (Casa Civil) will also participate in the meeting.
“Once these details are resolved, the question is how the president will decide to dialogue with both Houses [Senado e Câmara]but for our part, I want to believe that by the end of tomorrow morning, we will have these issues decided,” Haddad told reporters.
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Pressured to cut spending, Lula finds himself between displeasing allies and calming the market
The expectation is that an announcement about the spending cut will take place this Thursday afternoon (7) or Friday (8). There is still no information whether the package will be released before or after conversations with presidents Arthur Lira (PP-AL), of the Chamber, and Rodrigo Pacheco (PSD-MG), of the Senate.
The cuts will be sent to Congress in the form of a Proposed Amendment to the Constitution (PEC) and a Complementary Law Project (PLP).
Haddad stated that he concluded conversations with all ministers on Tuesday (5) and that “they are very aware of the task that lies ahead, of strengthening the fiscal framework, predictability and sustainability of finances”.
Although there is still no official proposal, the package will, in general terms, include the inclusion of mandatory government expenses in the rules of the fiscal framework, which limits the expansion of spending to 2.5% above inflation. If there is an increase above this level, an alternative would be to activate triggers to stop mandatory spending.
“What we are taking to the president is consistent with the thesis that we are defending, of strengthening the fiscal framework”, declared the minister, highlighting that he presented the country’s fiscal situation to the other ministers in the meetings that were held this week.
Among the options – which generated criticism from the ministers involved, such as Carlos Lupi (Social Security) and Luiz Marinho (Labor) – are .
These last two directly hit the pockets of CLT workers, an important slice of the president’s electoral base. But these are policies considered expensive and inefficient.
According to data from the National Treasury, the BPC – intended for the elderly and people with disabilities who did not contribute enough to Social Security – consumed almost R$73 billion from January to August and R$106 billion in the 12-month period.
The salary bonus, paid once a year to workers with a formal contract who receive up to two minimum wages, also faces problems. “It’s a question of the program’s design,” says João Pedro Paes Leme, an analyst at Tendências. “It ends up being too expensive for what it delivers.”
Unemployment insurance, in turn, has presented a curious distortion. Spending on the benefit increased by 20% between January 2022 and August 2024, going from R$43.6 billion to R$52.5 billion, adjusted by the IPCA. The movement draws attention because unemployment decreased from 13.1% to 6.6% in the same period.
