BRASILIA (Reuters) – Brazil’s Finance Minister Fernando Haddad said on Monday that fiscal measures to support the country’s fiscal framework could be announced this week, adding that the government is in the final stages of preparation for the announcement.
Speaking to reporters, he said President Luiz Inacio Lula da Silva is expected to call him later on Monday for a meeting on the matter.
“After the meeting with him, I’ll speak with you,” he said.
The minister had previously stated that the government would announce measures after the municipal elections concluded at the end of October to give longevity to new fiscal rules approved by leftist Lula last year.
The fiscal framework caps overall spending growth to a certain limit above inflation.
However, with many mandatory expenses – such as social benefits and pensions – growing at a faster rate, this dynamic squeezes the space for investments and operational expenses.
Numerous economists warn that without reforms to curb expenditures, the framework would become unsustainable within a few years.
Uncertainty over the fiscal outlook and the upcoming government measures have been affecting Brazilian asset prices, weakening the real against the U.S. dollar and pushing up future interest rates. Following the minister’s comments on Monday, the local currency strengthened 1.6%.
On Sunday, the Finance Ministry had already said that Haddad canceled a planned trip to Europe this week at Lula’s request to address domestic issues.
“As the president asked me to stay, and since things are technically very advanced, I believe we will be able to make the announcement this week,” he said.
(Reporting by Bernardo Caram, Writing by Marcela Ayres, editing by Franklin Paul)
Comments