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Mar 25, 2023
Lula’s Delayed Trip Opens Door to Unveil Fiscal Plan This Week
(Bloomberg) -- Brazil’s economic team will accelerate a highly-anticipated fiscal plan, which could be announced as early as the coming week after President Luiz Inacio Lula da Silva postponed a trip to China, said a person familiar with the matter.
The plan, aimed at closing Brazil’s fiscal deficit, was only going to be announced after Lula and Finance Minister Fernando Haddad returned from China. With the trip now postponed after the president was diagnosed with influenza, Haddad will be able to negotiate the final details and get Lula’s blessing sooner than previously expected, the person said, asking not to be identified because the matter isn’t public.
Read More: Brazil’s Lula Postpones Trip to China on Health Reasons
The economic team has the support of lower house speaker Arthur Lira to speed up the plan, said the person. But there is no guarantee it will come before Tuesday, when the central bank releases the minutes for its last meeting where it decided to keep the benchmark interest rate at 13.75%.
The finance ministry didn’t immediately respond to a request for comment.
Lula was admitted to a hospital in the capital of Brasilia on Thursday, where he was diagnosed with influenza and is receiving treatment. Brazil has notified China and is seeking an alternative date for the trip.
Financial markets are waiting for details of the proposal that will replace Brazil’s spending cap rule. The concern is that Brazil will be unable to balance its budget while also meeting Lula’s campaign promises for greater investment and social spending to boost growth. If the new fiscal framework generates confidence, it could help the central bank to lower borrowing costs in Latin America’s largest economy.
Read more: Lula’s Team Vows Credible Budget After Clashing on Fiscal Plan
--With assistance from Peter Millard.
©2023 Bloomberg L.P.
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