First quarter is key for economy to 'change course,' Haddad says
Brazil’s economy is decelerating and "the first quarter is vital for us to change course," said Finance Minister Fernando Haddad on Tuesday before meeting, for the first time, his entire team. Later this week, Mr. Haddad intends to take to President Luiz Inácio Lula da Silva the "flight plan" of his ministry with short, medium, and long-term measures.Mr. Haddad ruled out the adoption of an exchange rate target and said that, in his view, the country’s current interest rate is "out of purpose." The economic team is working on re-estimating the scenario to present to President Lula. Among the priorities of the first half of the year, he said, are the new fiscal framework and tax reform, which may make their way together through Congress."We have a quarter to unveil the necessary measures to put the Brazilian economy on the right track," Mr. Haddad told the website Brasil 247. "Starting in April, with the committees formed in Congress, we can forward the structural measures that Brazil needs."Tax reform needs to be "pragmatic," according to the minister, to overcome obstacles that in recent years have prevented the matter from advancing in Congress. Starting in April, the objective is to deal with indirect taxes. After that, Income Tax and deductions, for example, will be discussed."Without increasing the tax burden, we can recompose this basket [of taxes] in order to have a less regressive system. The poor pay more tax proportionally to their income than the rich, unlike in developed countries," he argued. "The situation has reached such a level of disorganization that the prevailing view [in Congress] is that we need to do something."In this sense, the proposals to amend the Constitution (PECs) 45 and 110, which are already in Congress, represent advances. "We have to measure how much we can advance. Sometimes, too much ambition makes reform unfeasible. We must be pragmatic," he said.Mr. Haddad also justified that he cannot correct the Individual Income Tax (IRPF) rates this year due to a rule establishing that an eventual determination to increase the income tax can only be implemented the following year.Unlike President Lula, Mr. Haddad used a moderate tone in his inauguration speech, advocating fiscal balance. This was not enough to stop stocks from falling. In the minister’s view, however, the market’s behavior is related to former President Jair Bolsonaro’s legacy, which he says is now beginning to appear."It is...
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