Minister Gleisi Hoffmann of the Secretariat of Institutional Relations considered the reaction of the National Congress and the Financial Market to the Lula government decree that increased the Financial Operations Tax (IOF).
Responsible for the political articulation of the Planalto Palace, Gleisi stated in an interview with Folha de S.Paulo that the elevation of the tax by decree is a legal attribution of the President of the Republic, but stressed that the government is open to review the decision in dialogue with deputies and senators. According to her, the negative repercussion was great, although not the first time the IOF has changed, nor will it be the last.
The decree that raised the IOF was signed in May, generating Congress reaction, which threatened to revoke the measure. To avoid overthrowing, the government has requested a deadline and intends to discuss on Sunday (8), in a meeting with the presidents of the House and Senate and party leaders, proposals for expenditure cuts to replace the tax increase.
Gleisi explained that perhaps parliamentarians were not able to properly evaluate the proposal at the moment, but that dialogue is fundamental and part of the political process. She said the government does not intend to publicly discuss any proposal before the conversation with Congress, but said that measures that can be applied in 2025 will be on the agenda.
According to the minister, the situation has calmed down and many people understood what the government needed to do, and now the focus is to discuss punctual issues to ensure budgetary and fiscal sustainability.
CUTTING OF EXPENSES
Alternatives under analysis include changes in the Fund for Maintenance and Development of Basic Education (FUNDEB), tax benefits review and greater betting sites, among others.
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Gleisi stated that the decision to raise the IOF was made as an adjustment “within the regulatory framework of the fiscal frame.”
Before taking office, she was critical of spending cutting measures discussed by the government to comply with the framework, but now defends her commitment to these rules, considering the recent “enough and important” adjustments to ensure the sustainability of the model.
According to the minister, the country does not face a problem of fiscal imbalance, and making some corrections in the process is natural, taking into account the size and complexity of the public budget.
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Positive economic framework
She also highlighted a positive economic framework for Brazil, citing the GDP growth projections, job creation and public promotion banks’ performance.
The fiscal adjustment was highlighted by Gleisi as one of the largest in the recent history of the country, with the reduction of the deficit of 2.1% of GDP by 2023 to 0.09% by 2024.
The minister denied that there is contradiction between the fulfillment of the tax framework and the elaboration of social programs to regain the popularity of President Lula towards the campaign of 2026.
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Although there is a wing of the government that advocates Bolsa Familia next year to reverse the fall in the president’s popularity, Gleisi stated that there is no concrete proposal in this regard and that Lula will not give up the minimum wage readjustment policies above inflation and binding the minimum wage to social security benefits. She pointed out that if the measures are good, the president will naturally be well evaluated.
Regarding the basic interest rate, Gleisi pointed out the expectation that the Central Bank will stop the rise cycle at the meeting of the monetary policy committee scheduled for June 17 and 18. Although he was critical of Selic’s highs in the previous management, he defends the decisions made by the current president of the monetary authority, Gabriel Galipolo.
She stated that economic stability allows greater interest rate control, and believes it was time for the stagnant rate and start to decrease.
