09/16/2024 – 21:28
Finance Minister Fernando Haddad recently said that it is necessary to be intellectually honest and put the reality of Brazilian public spending “on the table.” Haddad emphasized that, given the numbers, he does not “slow down” even for PT governments.
“We need to be intellectually honest with each other and put numbers on the table, to see where the problem started. I am not a person who takes it easy, not even for PT governments; numbers are numbers and we have to face them. It is only with this truth that we will find the path to structural sustainability, which is the central objective of the Treasury,” said the minister during an event promoted by the Economic Value.
Haddad acknowledged the difficulty in advancing the spending review agenda – which has been frequently demanded by the market – but reinforced that the solution needs to be built on politics.
“There is no point in going into battle with certain defeat. It is a process of persuasion (…) It is difficult, no one wants to give in, everyone thinks that their ministry is the most important, that their agenda is the most important, that they are the beacon of development. That is normal. But we are working tirelessly to explain how the ecology of the thing has to work”, he reinforced.
Haddad also said that the economic team does not deny the existence of problems involving government spending. “The problem is when you deny the issue. When you start denying that the problem exists, then you run a serious risk of getting into trouble. But we are not doing that for a single day,” he said. He was asked about the limits on the spending review agenda and about the possible need to promote a new pension reform during the current term of President Luiz Inácio Lula da Silva.
BC
Haddad assured that the nominations for the board of the Central Bank (BC) are based on technical principles and not political ones. When commenting on the choice of Gabriel Galípolo to lead the BC starting in January, Haddad maintained that President Luiz Inácio Lula da Silva does not nominate names so that they can do what the head of the Executive wants.
The members appointed by the government to the Central Bank, Haddad added, arrive at the institution because they were highlighted as technicians capable of making Brazil reach its inflation targets, taking into account economic indicators and the new continuous target regime.
Haddad stressed that the government is improving the economic tripod, with innovations in the fiscal, monetary and exchange areas.
When asked about the interest rate decisions that will be made on Wednesday in Brazil and the United States, Haddad assessed that there was a mismatch between central banks around the world. He recalled that, after the market predicted that interest rate cuts would begin in the United States in June, the announcement, which he considered “crooked” by the Federal Reserve, led many investors to believe that the institution would raise its rate.
The uncertainties surrounding the Fed Funds, Haddad pointed out, have complicated the situation in Brazil, contributing to a series of unanchorings. With the prospect of interest rate cuts by the Fed, joining the European Central Bank (ECB), the minister understands that a re-coordination of central banks is taking place. “These are considerations that the Central Bank of Brazil will have to take into account when making a decision,” commented Haddad, when addressing this week’s meeting of the Monetary Policy Committee (Copom).
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