'If you can create a zero surplus, great; If it doesn't work, that's great too', says Lula

President Luiz Inácio Lula da Silva again criticized this Thursday, 8th, the discussions involving compliance with the target of zero fiscal deficit. According to him, “if you can create a zero surplus, great; If it doesn’t, that’s great too.”

In an interview with Itatiaia radio, in Minas Gerais, the president stated that government spending will depend on revenue. “If revenue increases, we have more money to spend; if it decreases, you reduce what you have to invest,” he said.

The Minister of Finance, Fernando Haddad, has insisted on maintaining the fiscal target of zero primary deficit this year and announced a series of measures to try to increase revenue.

The economic team's objective of seeking balance in public accounts, however, is resisted by sectors of the PT and the government itself.

In October, Lula even admitted that the government will “hardly” meet the fiscal target of zero deficit in 2024. “I'm not going to start the year by cutting billions in the works that are a priority in this country. I think that, often, the market is too greedy and keeps demanding the target that they believe will be met”, said Lula, at the time.

In a message to Congress earlier this month, the president, however, praised the new fiscal framework as a way of “guaranteeing the stability of fiscal policy and creating the appropriate conditions for socioeconomic growth”.

He also highlighted that the 2024 Budget was sent to Congress with the goal of “zero primary result”.

IR range

This Thursday, Lula also reinforced the promise that, by the end of his term, he will determine that people who earn up to R$5,000 will be exempt from Income Tax (IR). According to the PT member, the government will make adjustments to the table every year until 2026.

“I made a provisional measure ensuring that anyone earning up to two (minimum wages) does not pay income tax. We will, each year, make it until we reach R$5,000,” he said. “I'm defining that the rich have to go to Income Tax and the poor have to go to the Union Budget.”

On Tuesday, the 6th, the federal government determined a new increase in the exemption range of the Income Tax collection table. The exemption will be valid for individuals with monthly remuneration of up to R$2,824, an amount that corresponds to two minimum wages.

With the new value, around 15.8 million Brazilians will be free from paying tax at source, according to the Ministry of Finance. The ministry estimates that the adjustment will result in a reduction in revenue of R$3.03 billion in 2024, R$3.53 billion in 2025, and R$3.77 billion in 2026.

Mercosur

Lula recognized this Thursday the possibility of weakening Mercosur depending on the progress of Argentina's economy, under the government of Javier Milei. In the statement, he confirmed that, to date, he has not yet had contact with the Argentine.

“Regardless of the speeches he (Milei) makes to please his people or his voters, I think Mercosur is stronger than that. I think the relationship between Brazil and Argentina is a very strong relationship”, said the president.

Lula stated that, despite not having spoken to Milei, Brazilian and Argentine institutions talk to each other and, because of this, he does not see any harm in relation to Brazil. “Obviously you will have the possibility of a weakening of Mercosur depending on the behavior of the Argentine economy. But I don’t see any major problems with Brazil,” she commented.

In Lula's assessment, it is necessary to see the difference between the theory and practice of Milei's government.