Lula says that just paying interest on the debt is not considered an expense by the market

President Luiz Inácio Lula da Silva (PT) once again criticized the financial market this Thursday (19), for considering resources destined for areas such as education and health as expenses.

“Perhaps some of my colleagues linked to the economy don’t like it, but I say it every day: you can’t talk about education that people say is spending, you can’t talk about health that people say is spending, you can’t talk about urbanization of slums that is spent, you cannot talk about building housing that is spent,” said the president.

“The only thing that is not considered as an expense, by these market people, is the payment of interest on the debt. They think that this is an investment”, added the president, in a meeting with presidents of universities and federal institutes of education.

Lula also returned to attack the independence of the Central Bank and the interest rate and defended the tax reform, to change the ranges of the Income Tax.

Since before his inauguration, Lula has been criticizing the market’s reaction to his speeches related to fiscal stability. He went so far as to state that the only golden rule –referring to the key term of the Fiscal Responsibility Law– was for children to have a glass of milk to drink before going to bed.

The new speeches were given during a meeting between Lula and the presidents of public universities, at the Planalto Palace. The president then defended greater investments in the education sector and said that it is necessary to repair a 500-year-old social debt.

Lula returned to criticize the independence of the Central Bank, just as he had done the day before in an interview with Globonews. She said there is no logic in the current interest rate.

“What is the explanation for us having an interest of 13.5% today? The Central Bank is independent, we could not even have interest. Inflation is 6.5%, 7%, why is interest at 13, 5%? What is the logic? What is the logic of the market’s mistrust of everything we talk about investment? I don’t see these people talking about social debt,” said the president.

Lula also defended the change in the Income Tax exemption range, as a way of correcting injustices. And she also defended a more active role for the State. He recalled financial crises related to bank failures, stating that it was national governments that bailed out the system.

“The state can be the regulator of social justice in this country. What is needed is for us to distribute resources in the most correct way for those who need it most. There needs to be an agrarian reform [tributária] for [que] those who earn more pay more; those who earn less pay less. It is not possible for a person earning R$5,000 to pay proportionally more than a guy earning R$100,000. It’s a reverse tax policy,” he said.

The president criticized those who are against the Fies (student financing program). He also said that the biggest debtors of Social Security and Income Tax are rich people.