In a press conference in Washington, Brazil’s Finance Minister Fernando Haddad addressed concerns over the country’s fiscal framework, assuring that a “remedy” would be discussed with President Luiz Inacio Lula da Silva upon his return to Brazil. Haddad, who is currently attending IMF/World Bank and G20 meetings, emphasized that he was more concerned about the international scenario, particularly the volatility caused by the US elections, than the domestic situation.
Despite the high level of future interest rates, Haddad remains optimistic about Brazil’s economic performance, comparing the current uncertainty to a “cloud of uncertainty” that will eventually dissipate, allowing the country to move forward with its agenda.
Haddad acknowledged market concerns over the sustainability of the fiscal framework, which sets a maximum cap for spending growth tied to primary budget outcome targets. He dismissed suggestions that the government is neglecting public finances, stating that initial projections for the primary deficit were exaggerated, and the government is on track to deliver a surplus within the official target band this year.
The Finance Minister emphasized that his ministry is working to strengthen the fiscal framework adopted by Lula’s administration, which has been met with criticism over the rapid growth of mandatory spending, such as pensions and social programs, limiting space for other expenditures within the cap.
Haddad’s remarks come as the International Monetary Fund (IMF) has expressed concerns over Brazil’s fiscal performance, highlighting the need for fiscal discipline to ensure the country’s long-term economic stability.
Image: Brazil’s Finance Minister Fernando Haddad speaking during the G20 finance leaders meeting in Rio de Janeiro, Brazil, on July 26, 2024. (Reuters)
