Financial market foresees Haddad’s ‘bite and blow’ policy at the Farm

The nomination of a former banker as number 2 in the future Ministry of Finance reinforced the market’s expectation that the future PT minister, Fernando Haddad, would adopt a “bite and blow” management style at the head of Lula’s economy 3.

On the one hand, the elected government has shown signs that it will increase spending, while at the same time giving indications that it will seek to hold the trajectory of the public debt. The ratio of debt to GDP is one of the indicators most closely followed by investors: the higher the ratio, as a rule, the greater the risk of the creditor, which tends to increase the interest charged.

The side that bites the most are the discussions on the PEC of Spending in Brasília, in which extra expenses are expected that exceed R$ 150 billion. On the side that blows the most, they expect a formation of the economic team that goes in the opposite direction, with names that please investors.

The name of the former president of Banco Fator, Gabriel Galipolo, for example, goes in that direction. Galipolo, who coordinated the former mayor’s government plan in the dispute for the state of São Paulo, would have accepted this Tuesday (13) Haddad’s invitation to the executive secretary of the Ministry of Finance.

Economist André Perfeito believes that the name of Galipolo tends to be well received by investors.

“I believe that the investors’ reaction should be positive. After all, he was from the market and has a good dialogue with the financial industry”, says Perfect.

He adds that investors’ attention will be focused especially on the appointment of the new government’s economic policy secretary, who is usually one of the main people responsible for dialogue with the financial market. Haddad should announce other names for the economic team this Tuesday.

Chief Economist at Mirae Asset Wealth Management, Julio Hegedus Netto also welcomes Galipolo’s choice.

“I think it’s a name that will be well accepted by the market. He has good market experience, and it’s important that he, as executive secretary, has good transit in the financial market. It was a good choice and I consider the right decision of Minister Fernando Haddad”, says Hegedus Netto.

Silvio Campos Neto, senior economist at consultancy Tendências, has a more cautious view of the name Galipolo. “I don’t know him very well, but I know that he has a more developmental vision. It is important that he manifests himself in the next few days to say what he thinks, what he wants in the position, so that we can obtain better information and be able to assess more precisely what is the orientation that you intend to adopt.”

Perfect says he still hopes for a management in the “bite and blow” style of Fernando Haddad at the head of the Ministry of Finance.

In this sense, his expectation is that, at times, members of the ministry signal a policy of increasing spending, but at others, they also indicate the government’s intention to adopt greater fiscal austerity.

“By the tone of Lula’s recent statements, it seems to me that this is a bit of the game that Haddad will try to play”, says Perfect, who underscores the importance of recent gestures that may please the market, such as Haddad’s approach to the president from BC (Central Bank), Roberto Campos Neto.

The economist also says that the former mayor’s name was far from being the market’s favorite, but that, considering the current level of the Stock Exchange and the dollar, there is room for appreciation, as long as there are no surprises considered very negative by the agents. finances in relation to the conduct of the economy.

Hegedus Netto, from Mirae Asset, also recalls that, in recent statements, Fernando Haddad stated that the tax reform will be one of the priorities in the economic area in the first year of the government.

According to the expert, the most important point in the discussion of tax reform concerns the unification of taxes, with the creation of VAT (Value Added Tax).

“The tax reform involves a simplification of the tax burden, and perhaps with a tax on profits and dividends, which is an open debate”, says Hegedus Netto.

Campos Neto, from Tendências, affirms that the tax reform is an important advance in the economic field for the next government, in particular as it brings some compensation considering the expected increase in expenses with the Gastança PEC.

“We know that it is a reform that is difficult to implement, that affects different sectors and states, there is always resistance, but, at first, it seems to have some viability, not least because there is already a ready-made text of good quality produced by a person who has transit with to PT, which is Bernard Appy”, says Campos Neto.

The Tendências economist says that the mistrust that still remains in the market stems from a developmental vision that remains strong in the elected government, according to which economic growth would be driven mainly by State action. “The big concern is whether we will have a resumption of this model.”

He adds that the market recognizes the importance of the State’s action in areas that do not arouse the interest of the private sector, but that the investors’ concern concerns the impetus of this state interventionism in the economy in a broader way, through public banks or programs along the lines of the PAC (Growth Acceleration Program) or the MCMV (Minha Casa Minha Vida).

“Given the budget constraints and the market’s attention on top of that, I believe that the government should not walk with the same impetus that we saw on other occasions”, says the economist, also remembering that Congress itself, with its profile more to the center, can contribute to avoid moving in that direction.