Lula will have a loyal base of one in four deputies in his fourth term, says Diap

Elected for a fourth term in an election held in October, Lula should have the faithful support of just one in every four deputies, according to a Diap survey cited by InfoMoney. There are 124 parliamentarians who consistently support the government, the smallest contingent identified by the entity since the Collor government in 1990.

The survey examined the composition of the Legislature elected in October. When reading this report, the data reveals a narrow stable base: the majority needed to approve each project will have to be assembled vote by vote, with support that is not guaranteed in advance.

The same entity, however, assesses that Lula is capable of forming a broad majority in the Chamber. The difference between the two numbers is the center of the analysis. There is a group of deputies who are not permanent allies, but can be negotiated, and the challenge, according to the survey, is to transform these negotiating parliamentarians into a basis for voting.

Among the votes that will test this articulation are economic policy, the Budget and the reforms proposed by the Executive. These are topics that directly influence interest rates, exchange rates and the perception of fiscal risk, and therefore attract the attention of those who follow the stock exchange and the interest market.

For the editorial line of this newspaper, which defends fiscal responsibility, free markets and lower taxes, the central question is whether this base will be willing to support cost containment and tax simplification measures. The data collected does not indicate which proposals would have this support, and it is precisely this that should set the tone for the next period in Congress.

What changes for the investor

For those who invest, the main sign is caution regarding the predictability of the economic agenda. A smaller loyal base tends to make the approval of Budget items and reforms more dependent on specific agreements, which can increase uncertainty about the direction of public accounts and, with it, the sensitivity of assets linked to interest and exchange rates. If the articulation works and Congress approves a consistent fiscal agenda, the effect could be the opposite. This analysis does not recommend buying or selling assets or forecasting quotes. She points out what to observe: the formation of the majority in the Chamber and the progress of votes on economic policy, Budget and reforms.

Automatically translated from Portuguese.