Lula insists on choosing minister after 2nd round despite market pressure

Former president Luiz Inácio Lula da Silva (PT) said this Thursday (6th) that he intends to define his team of ministers only after the second round, if elected. From now on, however, he indicates that he wants a composition not only with members of the PT or allied parties, but also with “outsiders”.

The signal comes at a time when businessmen and market representatives are demanding more details from the PT in the proposals for the economic agenda, as well as a name to command the Ministry of Finance – which should be spun off from the current Ministry of Economy.

“First I have to win the elections. When I win the elections I will assemble the government. And I will assemble the government not only with my party or with my allies here, there are people from outside who will participate”, said Lula during an event with PSD representatives in Rio.

“When setting up the government, it’s like scaling a team. You’ll choose the best, those who will win the game,” he said.

The former president answered a question precisely about who would be the holder of the Treasury, a portfolio that centralizes the main economic decisions of the government. On other occasions, Lula has already expressed his intention to appoint someone with a more political profile, to act with ease in negotiations with the National Congress, but he never mentioned possible candidates.

“You are talking to the citizen who was a candidate for president in 1989, 1994, 1998, 2002 and 2006. No one has ever asked me to nominate a ministry before. It’s crazy for anyone to imagine that you can nominate a team before. If I have ten economists here and nominate one, I will win one and lose nine. What intelligence is this? What madness is this?”, he said.

Speculation grows as Lula receives support from leading economists, such as Armínio Fraga (former BC president in the FHC government), Pedro Malan (FHC’s former finance minister), Pérsio Arida and Edmar Bacha – the latter two worked in the formulation of the Real Plan.

The PT also has the public endorsement of Henrique Meirelles, former president of the BC in the Lula government and former finance minister in the Michel Temer government (MDB).

The line of names with wide acceptance in the financial market intensified the pressure for the nomination for the command of the government’s economic area. In an interview with Globonews, Arida sought to contain the betting market and said he believed that the profile of nomination for the command of the Farm tends to be a PT politician.

Lula’s signaling, however, opens the way for a broad composition. In 2003, the PT chose doctor Antonio Palocci, then a trusted PT politician, to command the Farm. He brought together in his team names such as Marcos Lisboa and Bernard Appy, economists identified with the liberal field.

The ex-president’s speech reinforces what different party members had already been declaring in public to counter the demands of the market for more details in the economic field.

Guilherme Mello, PT economist, denied last Wednesday (5) that the party is asking for a “blank check”. He also used the football metaphor to say that there is no way to choose the minister now, just as there is no way for a coach, before being hired, to start the starting lineup.

“The market presses [para saber] what is the tax rule. My dear, are you not bothered by the government that has done away with all fiscal rules? will charge the [atual ministro da Economia, Paulo] Guedes the secret budget, the end of the ceiling rule that he changed four times and announced that he will change a fifth”, said Mello in a live on the Shanghai Connection channel, by economists such as Paulo Gala (chief economist at Master Bank).

“Now he [mercado] wants to know the specific design of the new rule. He is wanting to know the specific design of a policy that will have to be negotiated [por meio de] a JEP with Parliament. Then it gets difficult,” she said.

Mello stated that the Lula government has already proved that it is possible to govern with fiscal responsibility with only two fiscal rules as a constraint – the golden rule (which prevents indebtedness for current expenditures, such as salaries and pensions) and the LRF (Fiscal Responsibility Law).

In the PT, there is a debate among economists about the treatment to be given to the fiscal regulation. One wing defends the adoption of a mechanism closer to that defended by the former Minister of Finance and Planning Nelson Barbosa – who defends that the president-elect define, in the first year of his term, what will be the level of expenditure in the following years. Another wing, linked to the PT president, Gleisi Hoffmann, defends a return to the LRF logic – with the search for the fulfillment of the primary results goals.

“If you ask me as an economist what I think of the LRF, I think it made a very important contribution at a time in Brazil. It has problems, but it had many merits. Now, it is an outdated rule,” said Mello.

“The world no longer uses rules like annual primary target type with no band, no adjustment and nothing. Because it is a pro-cyclical rule. When the economy grows, the government collects a lot and can spend more. When the economy falls, the government stops collecting and has to cut expenses. And what expenses? Investments”, he said. “We are going to have to create a new rule to be able to rebuild this country with credibility.”

On Tuesday (4), Gleisi had stated that the party has been talking to the business community and market representatives and that there is no surprise in relation to what the PT thinks, nor about how public finances were treated, with responsibility, in the era.

“I don’t see what gesture we could make in that sense. Both the market and the business sector know what Lula thinks,” he said.