Fiscal adjustment is not incompatible with promises from the Lula 4 government, says André Esteves

The fiscal adjustment is not incompatible with the campaign promises for the fourth term of Luiz Inácio Lula da Silva (PT), said banker André Esteves, chairman of the board and main partner of BTG Pactual, this Friday (13).

The adjustment project prepared by the federal government provides measures to help the economic team seek the center of the primary result target, the difference between revenues and expenses minus public debt service. The Senate approved the basic text this Thursday (12).

"The necessary adjustment is not incompatible with what was promised, signaled by the legitimately elected president," said Esteves at an event organized by IDP, an institute founded by Gilmar Mendes, in partnership with the Metrópoles website. "The president can and must follow everything he promised for society and at the same time make the adjustment that I think is necessary."

The Minister of Planning and Budget, Bruno Moretti, said that the actions will represent an extra effort of R$46 billion to R$56 billion to meet the target in 2027.

Esteves stated that he does not see political or economic difficulties for fiscal adjustment. For the banker, reducing the basic interest rate from the current 13.75% per year to around 8% would represent the biggest social program to be carried out in the country.

"It is much more important than any individual program and much more important for the base of the pyramid. High interest rates create enormous harm for the base of the pyramid," he said.

He classified resistance to fiscal adjustment as economic denialism. "In the same way that there were people who denied the need for a vaccine, there are people who denied the need to take this path," he stated. "There is nothing wrong in Brazilian society, in the Constitution, in the functioning of institutions, that would lead us to have these enormous interest rates."

"It has nothing to do with being left, right or center, it has to do with doing the right thing. We ended hyperinflation, and President Fernando Henrique Cardoso kept this legacy for life. I think now we have the opportunity to put an end to excruciating interest rates in Brazil."

Esteves also said that the public account deficit is a problem that extends to other countries.

"In the post-Covid period, Western democracies were very efficient in supporting societies and inefficient in returning to previous discipline. The problem we are experiencing, in some magnitude, is the same problem in the United States, England, France and Japan", he said.

The banker criticized the view that half a dozen agents represent the market.

"The market is society making decisions with its resources. Some are more concerned, others are more ambitious, some are thinking more in the long term, others more in the short term. There is no such entity as a market, the price movement symbolizes an opinion of society", he stated.