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Fiscal conflict sparked by Brazil's elected government shows ignorance, says Guedes

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Fiscal conflict posed by Brazil's government-elect shows ignorance, says GuedesEconomic 43 minutes ago (Nov 18, 2022 03:55pm EST)Fiscal conflict posed by Brazil's government-elect shows ignorance, says Guedes

© Reuters. FILE PHOTO: Brazil’s Economy Minister Paulo Guedes speaks at the Planalto Palace in Brasilia, Brazil, October 6, 2022. REUTERS/Ueslei Marcelino/File photo

BRASILIA (Reuters) – Brazil’s Economy Minister Paulo Guedes said on Friday that so-called social needs and fiscal sustainability created by the newly elected government The conflict between them demonstrates ignorance and technical incompetence.

Speaking at an event hosted by the ministry, Guedes said any backlash at the economic level in relation to what the current government is doing is wrong.

Leftist ex-President Luiz Inácio Lula da Silva defeats rightwing incumbent Jair Bolsonaro in October presidential runoff .

Since last week, Lula has been rocking financial markets with speeches emphasizing social spending over fiscal responsibility.

“We have launched the largest social program ever and taken fiscal responsibility. So what is this story about the conflict between society and finance? It reveals ignorance and Lack of knowledge, and technical inability to solve the problem,” Guedes said.

The next government’s welfare program, Auxilio Brasil, which will be renamed Bolsa Familia, could indeed be increased, but funded by the currently exempt dividend tax, the minister said.

Lula’s transition team proposes indefinitely stripping nearly 200 billion reais ($37 billion) of spending from constitutional budget cap, with no corresponding spending in revenue , to pay for social benefits for low-income families and to increase public investment.

Earlier on Friday, Central Bank Governor Roberto Campos Neto said the final design of the spending package approved by Congress could force policymakers to “react” , implying the risk of a possible shift in monetary policy.

IDB

Guedes also said he sees Ilan Goldfajn, former central banker, as the Brazilian candidate for IDB president (IDB), will win the November 20 election.

Lula does not support Goldfargin’s candidacy. His cronies have even called for the support of the United States and other countries to delay the election until next year so that Brazil’s nomination can reflect its newly elected government.

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