In his first speech in office, Haddad said that the government would not accept the “absurd” primary deficit of 220 billion reais (41.19 billion dollars) foreseen in this year’s budget, and indicated that it will work to reduce it.
He added that he will work con “all the emphasis” on the recovery of public accounts while fighting inflationpromising to send to Congress the proposal for a new fiscal anchor in the first half of the year that seeks to guarantee the sustainability of the public debt.
Haddad did not mention Lula’s decision to extend a costly fuel tax exemption.
Before taking office, Haddad had stated that the measure – which has an annual impact of 52.9 billion reais – would not be extended.
Fiscal uncertainties in Brazil, the largest economy in Latin America, have delayed market bets on the start of applying an expansive monetary policy, which would help ignite domestic activity in a world slowdown scenario.
Haddad has been viewed with suspicion by the market for fear of uncontrolled spending in a country that already maintains high debt from its emerging peers.
On Monday he tried to allay these concerns, stating that the harmonization of fiscal and monetary policy would “certainly” take place and that the fiscal and monetary authorities would have to reach an understanding seeking balance. “We are not here for adventures,” he stated.
According to Haddad, the government will seek to democratize access to credit and establish a more transparent, “fairer and simpler” tax system.
Source: Ambito
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