Lula’s allies defend calibrating speech after election

Allies of the president-elect, Luiz Inácio Lula da Silva (PT), believe that the market exaggerated in the negative reaction after the PT’s speech this Thursday (10), but one wing admits that there should be greater caution on his part.

In general, people around the president consider that he just repeated the tone used during the election campaign. Therefore, there was amazement at the investors’ response.

There is an assessment, however, that Lula is now president-elect, and no longer a candidate. Hence the need to calibrate economic statements.

Investor discontent, fearing the future government’s fiscal agenda after the president’s speech this morning, contributed to the 4% drop in the Ibovespa, the Brazilian Stock Exchange’s reference index, to 108,964 points. The spot commercial dollar soared 4.08% and closed at R$ 5.3960, on sale.

After the stock market crash, Lula still mocked the effect of his own speech. He said he had never seen a market “as sensitive” as the Brazilian one.

For senator Randolfe Rodrigues (Rede-AP), the tone of Lula’s speech this Thursday was a “bump”. But that should not affect the relationship between the president-elect and the market.

Lula’s aides say that, despite the shock of the market’s reaction, the elected government is concerned about fiscal responsibility. They use as an example the fact that he set up a transition team with economists from different schools of thought, including liberals.

The national president of the PT, Gleisi Hoffmann, said that there is nothing to calibrate in the speech and criticized the reaction of investors. “It’s a speculative move,” she said.

For her, Lula’s speech has the support of 100% of the voters who voted for him. Earlier, she stated in a social network that the market misinterpreted the PT’s speech and that he would not have prioritized investments in the social area “to the detriment of fiscal balance”.

She also suggested that the reaction of investors was not the same when President Jair Bolsonaro (PL) approved measures that increased public spending in the pre-election campaign.

The PT team also cites the choice of vice president-elect, Geraldo Alckmin (PSB), which is in itself a sign to the center. The appointment of Persio Arida and André Lara Resende to integrate the economic nucleus during the transition even took place thanks to Lula’s running mate.

During the campaign, PT had a series of meetings with investors and businessmen. In these meetings, he always tried to emphasize that he had two governments with good results in the fiscal area, and that he would not need a spending ceiling to be responsible.

In this Thursday’s speech, Lula tried to mix statements that indicated an increase in spending and also control of expenses.

“We have to guarantee a very serious fiscal policy because we have to pay the interest [aos detentores da dívida pública]”, said the PT.

At another point in the speech, however, he questioned: “Why are people made to suffer to guarantee such fiscal stability in this country? Is it necessary to have a ceiling on expenses? Why don’t we establish a new paradigm?”.

This is the tone adopted by Lula’s team and by the president-elect himself to justify the need to approve the PEC (proposed amendment to the Constitution) of the Transition, which opens space in the Budget for the PT to be able to fulfill campaign promises in the social area, as the maintenance of the minimum amount of R$ 600 for Auxílio Brasil (which should be renamed Bolsa Família).

The forecast is that the text will put this entire social program outside the spending ceiling – a rule that prevents the growth of expenses above inflation.

Lula also said that “some things seen as expenses in this country will come to be seen as investments”, although party members deny that there will be a change in the classification of expenses in this sense.

The line adopted by the elected government is that the country will once again show sustainable rates of economic growth based on the reduction of social inequality. Lula and his allies see this formula as a means of generating domestic consumption and also heating up the economy.