Lula questions need for Brazil government spending cuts
Business
He is a strong critic of policies like higher interest rates and focus on reducing budget deficit
Hints at missing fiscal target, saying it is a matter of vision
Remarks 'you are not obligated to set a goal and achieve it if you have more important things to do'
SAO PAULO (Reuters/Web Desk) - Brazilian President Luiz Inacio Lula da Silva said he needs convincing on the need for cutting government spending, and did not rule out the possibility of Brazil not complying with its fiscal target, according to extracts of an interview to be published on Tuesday.
"It's a matter of vision", Lula said in the interview with local broadcaster Record TV, after being asked about the fiscal target.
"You are not obligated to set a goal and achieve it if you have more important things to do", he said.
Parts of the television interview were released on Tuesday afternoon, while the full interview will be broadcast later in the day.
Lula said, however, that Brazil will do "whatever is needed" to meet its fiscal target, which aims to eliminate the primary deficit, with a tolerance band of 0.25 percentage point of GDP in either direction.
He also said it would "not be a problem" for Brazil to post primary deficits of 0.1 per cent or 0.2 per cent of GDP.
Brazil's economic team is expected to unveil next week a bimonthly fiscal report, which investors are eager to get details of as it could bring the need to cut or block more spending to comply with the fiscal framework.
Read more: Lula again questions high Brazilian interest rates 'in a country with 4pc inflation'
Lula has been strong critic of traditional financial policies, including focus on reducing budget deficit, advocated by international financial institutions like the IMF and is against higher interest rates maintained by the central bank which is headed by Roberto Campos Neto who was appointed by former president Jair Bolsonaro.
Previously, he said the media frequently mentions Brazil’s fiscal deficit, but no one talks about high interest rates "in a country with 4 per cent inflation”.
"On the contrary, they celebrate with the central bank chief in Sao Paulo. Again, those attending the celebration must be profiting from the [Brazil] interest rate," he said.
