Former Finance Minister criticized the market’s reaction and spoke of “tactics to keep the government on the ropes”
Former Finance Minister, Guido Mantega, stated that the measures announced in the spending package do not cause an imbalance in public accounts. Mantega highlighted that the dollar exchange rate, which reached a record level of R$6, is “totally out of place” and stated that he does not see fiscal irresponsibility on the part of the government.
Mantega was Minister of Finance from 2006 to 2015, during the first 2 terms of (PT) and the (PT) government. In an interview with the newspaper published on Sunday (Dec 8, 2024), he said that Lula got the spending package right and the Income Tax exemption for those earning up to R$5,000, as the president cannot “do the whims of the market”.
“The market wanted to deindex and that did not happen. President Lula cannot just do the whims of the market, because, in fact, what increases public debt is interest [altos]. There was a lot of talk saying that public accounts are unbalanced, that there is fiscal irresponsibility, which does not exist”, said Mantega, to Sheet.
Mantega argued that negative market reactions are “a tactic” to control the decisions made by the federal government and predicted that the goal established in the plan will be met.
“The market will always think it is insufficient, because this is a tactic. Why? It’s a way for the market to keep the government on the ropes. Let’s imagine that the Ministry of Finance was optimistic and was unable to save these R$30 billion [em 2025]he will cut, make a contingency, and will meet the goal. The same thing will happen in 2026”, assessed the former minister.
Still on the financial market’s reaction to the announcement, Mantega criticized the Central Bank for not trying to balance the dollar exchange rate, which reached R$6.
“It’s done on a very small scale. This should be the first thing to do: look, we are not letting things run wild, we want there to be an equilibrium exchange rate, which is not what is there”said Mantega.
LULA SAYS HE IS OPTIMISTIC ABOUT THE SPENDING PACKAGE
President Lula said on Friday (Dec 6) with the situation in Brazil and even more optimistic with the spending review package announced by the government on November 27th. The measures, however, have faced difficulties in Congress and are at risk of being voted on only in 2025.
“I am very optimistic about what will happen in this country. And I want to say that I became more optimistic with the launch of the program that we announced now, from the Income Tax exemption for those earning up to R$5,000 to the attempt to moralize public benefits, because not everything is correct. But, above all, we charge rent from the richest people”, said the president in a speech made via videoconference at the seminar held by the PT in Brasília entitled “The Brazilian reality and the challenges of the PT”.
