MercoPress. South Atlantic News Agency

Lula back steps and admits that fiscal and social responsibility, go hand in hand

“During my two administrations I followed strictly fiscal responsibility with the federal budget, as I learnt from my mother, ”Lula said

After having clashed with the baking and financial sectors of Brazil, which had an immediate effect on the currency, interest rates and the stock market, president-elect Lula da Silva said on Friday he was prepared to be fiscally responsible with government spending.

 The dispute is over the elimination of the ceiling cap on spending, a bill from the outgoing Bolsonaro administration, which has helped to stabilize Brazilian finances and is considered crucial for the financial sector.

“During my two administrations I followed strictly fiscal responsibility with the federal budget, as I learnt from my mother, but I can say now I will follow on that path but not to the extend the financial system pretends”.

“My mom who was illiterate, taught me people must only spend what they have or what they earn, but if people have to take a debt to build a new asset, as long as people do it responsibly go ahead, it will help the country grow again”, Lula was quoted,

“I am committed to look after the Brazilian people with the upmost respect, with authority, I must say it loudly and clear, I have a commitment with the Brazilian people, I'm going to look after them as nobody has done before” underlined the president elect.

Lula also mentioned he was sufficiently humble as to listen to advice from economists such as Arminio Fraga, Edmar Bacha and Pedro Malan, followers of him but who warned in a open letter to the country, on the risks of ending the ceiling cap on spending and government finances, ignoring fiscal policy. The economists pointed out that public finances misbalance turns up into higher inflation, lower growth, with the poor, those Lula has promised to protect, the most harmed. The Workers Party economists insisted, fiscal responsibility and social responsibility go hand in hand.

“I didn't get to read the letter, but happily some mates called me to tell me they had read the letter, from important people, including former ministers, warning me of the economic problems and advising me not to advance along that path. Since I am a simple guy, I like good advice, and if it is really good you can be sure I will follow it,” Lula explained his change of attitude.

Fears of fiscal lack of control in Lula's next government in January ballooned on his support of the proposal for a Constitutional amendment that would not include Family subsides and other benefits, some 200 billion Reais, (US$ 38 billion from the overall expenditure).

As a result of the constitutional amendment discussion, the Brazilian currency plunged, markets lost ground, interest rates zoomed making loans dearer, conditioning growth and jobs.

“Let me tell you that when I first won the election in 2003, inflation was 12%, unemployment 12% and foreign debt 70% of GDP. When my time was over, inflation was 4,5%, debt was at 37% of GDP, Brazil paid the IMF and had international reserves to the tune of US$ 370 billion.”

When it comes to Lula's economic and fiscal policies in his next government, “it's me who can only talk, I have stats to support my words, since during y eight years, only Brazil in that period, of the G20, richest economies of the world, was the only country that managed primary surpluses”.

“Therefore there is no reason for the Stock market to act as it has been doing, people must be careful they don't fall into the trap of speculation, people must be aware of this”.

“Yes we are going to apply fiscal responsibility but not complying with all the demands from the financial system. Yes i am going to increase the national minimum wage, I am going to again create jobs. Let's not forget i Was elected to look after 215 million Brazilians, particularly those in most need, most vulnerable.”