From Poder360 · PODER360 · · 2m
Lula's Fiscal Policy Plan
José Sérgio Gabrielli defends cutting interest rates without austerity for Lula's next government.
In brief
José Sérgio Gabrielli defends cutting interest rates without austerity for Lula's next government. José Sérgio Gabrielli argues for reducing Brazil's interest rates through fiscal adjustments without austerity, citing weak correlation between primary budget results and interest rates. Originally reported by Poder360.
New Fiscal Plan Published
José Sérgio Gabrielli released a fiscal policy plan for the end of 2026 and 2027.
No Strong Correlation
Gabrielli claims there is no strong correlation between primary budget results and interest rates in Brazil.
Interest Rate Strategy
Gabrielli supports reducing Selic to 7.5% annually before stabilizing at 3-5.5% over the next 4-5 years.
Market Reaction
The market reacted negatively to Gabrielli's proposal for a new interest rate framework.
Fiscal Policy Focus
Gabrielli emphasizes maintaining minimum wages, BPC, Bolsa Família, and public health education funding.
Debt Concerns
Brazil's public debt reached 82.9% of GDP in September, with 11.2 percentage points increase since Lula's third term.
Debt Liquidity
Gabrielli states 90% of Brazil's debt is in national currency with large foreign exchange reserves.
Debt Liquidity
Gabrielli claims there is no reason for panic regarding Brazil's solvency with 69.3% of GDP in liquid debt.
Debt Drivers
Gabrielli identifies external factors like the US-Iran war as the main drivers of inflation, not domestic demand.
Market Reaction
The market reacted negatively to Gabrielli's proposal for a new interest rate framework.
Election Impact
Gabrielli attributes the B3 drop after Lula's election victory to market surprise and portfolio reorganization.
Fiscal Adjustments
Gabrielli supports fiscal adjustments without cutting minimum wages, BPC, Bolsa Família, or public health education funding.
Key Measures
Gabrielli prioritizes reviewing inefficient tax benefits, analyzing public contracts, and recovering tax credits from large contributors.
Economist Proposal
André Lara Resende's proposal for a CMN with fiscal and monetary policy targets for 4-5 years.
CMN Details
The CMN would reduce Selic to 7.5% annually before stabilizing at 3-5.5% over the next 4-5 years.
Market Response
The market reacted negatively to the CMN proposal, with the Finance Minister stating the government would not adopt a rate band.
The short version
José Sérgio Gabrielli argues for reducing Brazil's interest rates through fiscal adjustments without austerity, citing weak correlation between primary budget results and interest rates.
