Listed for Finance, Fonteles points to cuts in privileges as a path to Lula's fiscal balance

Rafael Fonteles (PT), re-elected governor of Piauí and tipped for the Ministry of Finance, has an answer to the question that weighs most on the next government: how to balance the books without cutting social programs. To Estadão, according to O Antagonista, he stated that fiscal balance is only possible by cutting privileges and waste.

The speech gains weight because, according to O Antagonista, the government replaced the spending ceiling with the fiscal framework in 2023, with a surplus target. The framework allows for a tolerance margin of 0.25 points above or below this target. The magazine reports that the government started to aim for the target floor.

Among the measures discussed with the economic team, Fonteles cited the University Nesting Fund, the zero tariff on weekends and Prospera MEI, according to O Antagonista. The reports do not provide savings values ​​for these measures, which leaves it unanswered how much each one would weigh in the bill.

Estadão describes Fonteles as a mathematician and points to him as a PT prodigy. According to O Antagonista, he recalled that Lula had a primary surplus in his first two governments. Speaking to Times Brasil, Fonteles denied having spoken to Lula about a position in the federal government.

To Times Brasil, Fonteles said that a sustainable trajectory of public debt would open space for a fall in interest rates and growth. For those who defend fiscal responsibility and lower taxes, the central question is whether the reduction of privileges and waste will be enough to close the bill without cutting social spending. The statements investigated do not detail which privileges or waste would be targeted.

What changes for the investor

For those who operate the stock market, interest rates and the dollar, the central point is the credibility of the fiscal target. If the reading of the reports is confirmed, a government that aims at the target floor and does not intend to cut social programs will depend on efficiency gains to gain space, and the market tends to look more at execution than at speech. Fonteles' thesis that a debt on a sustainable trajectory makes room for lower interest rates links the topic directly to fixed income, credit and exchange rates. None of this is a price prediction: Fonteles' quotation for the Farm is not confirmed and details of the measures are still scarce.

Automatically translated from Portuguese.