The speech by President-elect Luiz Inácio Lula da Silva (PT) this Thursday morning (17th), put more pressure on an already pressured market.
Directly from COP27, in Egypt, Lula again criticized the spending ceiling and antagonized social responsibility with fiscal responsibility. “When you put something called a spending cap, all that happens is you take money away from health, education, culture”, said the PT.
“You try to dismantle everything that is part of the social and you don’t take a penny out of the financial system. If I say that, the stock market will fall, the dollar will rise, patience… The dollar does not rise and the stock market does not fall because of serious people, but because of the speculators who live speculating every single day.”
Criticism of the spending cap mechanism, as well as the “gains of speculators”, promise another difficult day for the financial market, in the wake of the presentation of the Proposed Amendment to the Constitution presented last Wednesday by the elected vice-president Geraldo Alckmin ( PSB).
The PEC presented by the transition team ends, in four years, with what the Social Security Reform should save in ten. The worst idea prevailed from a marketing point of view: Lula wants almost R$ 200 billion per year outside the spending limits, and without a defined deadline.
The blank check is going to be expensive, as the expectation for the reduction of interest rates from the middle of next year is out of the picture. The January 2024 contract rate closed at 14%, above the current Selic rate, and public debt is expected to rise quickly with free spending and no fiscal rules.
In the market’s view, Lula’s plan transforms real needs into risk and uncertainty. On Thursday’s episode, the CNN Money will analyze the minutiae of Lula’s speech, in addition to details of the PEC presented to the National Congress.
Presented by Thais Herédia and Priscila Yazbek, CNN Money presents an overview of news topics that influence markets, finances and the direction of society and power dynamics in Brazil and the world.
*Posted by Tamara Nassif
Source: CNN Brasil
I’m James Harper, a highly experienced and accomplished news writer for World Stock Market. I have been writing in the Politics section of the website for over five years, providing readers with up-to-date and insightful information about current events in politics. My work is widely read and respected by many industry professionals as well as laymen.
