Haddad package heads in right direction, but execution doubts, say economists

The package of measures presented this Thursday (12) by the Minister of Finance, Fernando Haddad (PT), goes in the right direction, but raises doubts about its execution, since the expected increase in revenue involves items that can be questioned judicially or increase political pressure on the government.

The measures project a fiscal improvement of R$ 242.7 billion, which would leave public accounts in the blue, taking into account the current scenario.

According to economists, the measures came within what was expected and was anticipated by the market. With that, the reaction on the Stock Exchange this Thursday was limited. The Ibovespa closed at a low of 0.59%, at 111,850, after rising 8% in a week until last Wednesday (11).

But for Étore Sanchez, chief economist at Ativa Investimentos, of the R$ 192.7 billion expected in increased revenue, it is possible to be sure about the fulfillment of R$ 60 billion.

“The other measures are not so precise, whether due to a possible decision by the government itself or due to potential judicialization”, says Sanchez.

He highlights as the main example the withdrawal of PIS/Cofins on financial revenues and the use of ICMS credit (Tax on Circulation of Goods and Services), which together can yield R$ 34.4 billion. According to Sanchez, both are subject to fights in court.

The end of the exemption on fuels is another test for Haddad, according to economists, as it could affect Petrobras’ pricing policy and increase political pressure on the government of President Luiz Inácio Lula da Silva (PT).

Despite the reservations, the direction given by Haddad was considered correct. “If the government actually manages to reach this goal, the result would be very relevant for the market and in particular for interest rates”, says Guide Investimentos in a comment.

Sanchez also believes that the package is on the right path, and the goal set by the minister, of closing the year with a deficit between 0.5% and 1.0% of GDP (Gross Domestic Product) is close to that projected by Ativa.

“Our perspective is that the primary deficit will be around BRL 133 billion, which is equivalent to 1.24% of GDP, which should grow 1.2% this year.”

For Luan Alves, chief analyst at VG Research, Haddad’s announcement helps to alleviate some of the market’s fear of a fiscally irresponsible government.

“It is a package with a plausible implementation, since a good part of the increase in collection would come from the renegotiation of tax debts. But it is not simple”, concludes Alves.