Thursday, February 2

Brazil economy ministry rejects Lula transition team’s judgment on finances


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SAO PAULO — Brazil’s Economy Ministry on Sunday rejected assertions by president-elect Luis Inacio Lula da Silva’s transition team that the outgoing administration was leaving government finances “bankrupted.”

The Economy Ministry said in a statement that gross debt will reach 74% of GDP by the end of the year, with a primary surplus (excluding debt costs) of 23.4 billion reais, the first since 2013.

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“This will be the first government ending its term with debt ratios lower than in its beginning, the debt was 75.3% of GDP in 2018,” the statement said.

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Last week, the Planning and Budget group in Lula’s camp said President Jair Bolsonaro is leaving the Brazilian state “bankrupted,” according to former minister and transition team member Aloizio Mercadante.

Brazil will pay international financial institutions $1.23 billion next year, 20% below the $1.56 billion that was due in 2016, the ministry said.

The government said expenses to help the most vulnerable part of the population since the beginning of the COVID-19 pandemic have prevented raises to public servants through 2021.

Despite the ministry’s denial of fiscal problems, senator Marcelo Castro, who is leading budget bill negotiations, said there are no available resources to pay for different government programs next year.

Lula’s transition team is in talks to approve a bill allowing 145 billion reais in expenses above the current legally allowed ceiling.

Lula takes office on Jan. 1. The leftist ex-president narrowly defeated Bolsonaro in an Oct. 30 runoff election, a political comeback that ended Brazil’s most right-wing government in decades. (Reporting by Nayara Figueiredo, writing by Tatiana Bautzer; editing by Grant McCool)



financialpost.com