Brazil’s Lula holds more talks on fiscal framework, announcement expected before Saturday

BRASILIA (Reuters) – Brazil’s Finance Minister Fernando Haddad said on Monday that President Luiz Inacio Lula da Silva still intends to announce a highly anticipated new fiscal framework before his trip to China on Saturday.

Speaking to journalists at the ministry, Haddad said that before the announcement, meetings will take place until Tuesday under Lula’s guidance so that the new fiscal rules are debated with the presidents of the Senate, the Lower House, and political leaders.

Vice-President Geraldo Alckmin said during an event in Rio de Janeiro on Monday that Lula has not yet decided on the framework, seen as crucial after the president secured congressional approval for a multi-billion-reais package that bypasses the constitutional spending cap to increase social spending and meet campaign promises.

Alckmin said the new fiscal framework would combine factors such as the debt trajectory, a budget surplus, and spending control, without providing further details.

According to Haddad, the meeting where the framework was presented to Lula on Friday was “very productive,” and the president instructed the participants to “expand the conversation”.

Haddad, asked about the possibility of the framework being presented before the central bank’s rate-setting meeting on Wednesday, replied that these were two different agendas. The policymaker committee has its own dynamics, he said.

He said the conversation process should not be rushed as the resulting framework “needs to be solid, sober, and make sense to the people”.

Leftist Lula, who took power in January, has repeatedly criticized the high level of interest rates, which has been held steady at a six-year high of 13.75% since September, amid cooling inflation. He argued that high borrowing costs would drag the economy and threaten a credit crisis.

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