Economic management met the objective of controlling spending, but now Minister Fernando Haddad emphasized the need to improve communication after the market overreacted to the December spending cut plan.
The Brazil’s economy grew by 3.6% in 2024According to the Minister of Finance, Fernando Haddadwhile it is expected that the primary deficit of the year has reached the 0.1% of the Gross Domestic Product (GDP).
This way, the government of Luiz Inácio Lula da Silva would have fulfilled its objective of eliminating the primary deficitexcluding the payment of interest, since the goal allows a tolerance margin of the 0.25% of GDPor a deficit of up to 28.8 billion reais.
Haddad assured that his objective was leave the economy “in better conditions than I received it”which would imply control spending “in the right way, without harming low-income workers.” However, as weaknesses of his management, he emphasized the need for the Government improve its communication at a time when global markets remain very “sensitive”the official said in an interview with the television channel GloboNews.
Brazil facing a more challenging external environment
In that sense, he stressed that the outdoor environment is more challengingas the entire world is concerned about how the US economy will be managed, which could have a rapid and significant impact on commodity prices. assets.
After a spending cuts package long expected to disappoint markets late last year, further weakening the country’s currency, Haddad acknowledged that the Inclusion of income tax exemptions in the announcement may have contributed to the backlashas well as the delay in the disclosure of the measures.
However, the official He described the reaction of the Brazilian real as “exaggerated” and expressed his confidence that the exchange rate will end “accommodating”.
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Devaluation of the real: it fell 27% against the dollar in 2024
Last year The real plummeted 27% against the dollarone of the worst results among emerging markets, which weighed on inflation expectations and contributed to the tightening of monetary policynow under the direction of the governor Gabriel Galipolonamed by Lula da Silva and former deputy in the Ministry of Finance.
The Government distanced itself from the monetary policy route of the Central Bank and Haddad he insisted that The Government will not always agree with the diagnosis of the Central Bank, but he stressed that everyone has their rolereiterating that Lula He already highlighted his commitment to respecting the decisions of the bank’s policy makers.
Source: Ambito
