President calls those who blamed him for the currency’s weakening “morons”

28/06/2024

---

President Lula — Foto: Ricardo Stuckert/PR

President Lula expressed irritation on Thursday over analyses regarding the devaluation of the Brazilian currency, the real, against the dollar. During a meeting of the Economic and Social Development Council, Mr. Lula called those who blamed him for the rise of the U.S. currency “morons.” In his assessment, the exchange rate had already risen 15 minutes before his interview with a news portal, a factor that contributed to this spike.

“See what happened yesterday [Wednesday]. When I finished the interview [with the news website UOL], some commentators’ headlines were that the exchange rate rose because of Lula’s interview. And the morons did not realize that the exchange rate had risen 15 minutes before I gave the interview. Fifteen minutes before,” the president emphasized before an audience of businesspeople, union leaders, and representatives of social movements in Brasília.

On Wednesday’s session, the exchange rate had already opened under pressure due to the general strengthening of the U.S. currency abroad. However, it was during Mr. Lula’s interview with UOL that the rate accelerated its rise and surpassed R$5.50 per dollar for the first time since January 2022, as contextualized by Valor.

In that interview, Mr. Lula questioned the possibility of the government effectively seeking a balance for the government accounts. This is because, in the conversation, he said that the problem “is not having to cut [expenses], it is knowing if it is really necessary to cut or if it is necessary to increase revenue.” The statement was poorly received by financial market agents, one of the factors behind the real weakening.

After the damage, the president tried to repair his opinion about the trend of increasing government spending. According to Mr. Lula, he learned from his mother, Dona Lindu, that one should only incur debt if it is to improve one’s assets. On the other hand, the president said at the same event that Brazil’s public debt is a “small change” compared to the debt of other countries, like the U.S. and Japan.

“I did not learn economics at the university. I learned it from Dona Lindu. I can only spend what I have. If I am going to incur a debt, it has to be a debt that will improve my assets,” he said. “How are we going to make businesspeople invest if the market does not react? I am not talking about the Faria Lima [the avenue in São Paulo where many Brazilian banks have offices]; I am talking about the real market. If the market does not have purchasing power, where does this go?” he said.

Hours later, during an interview with Itatiaia radio station in Minas Gerais, the president returned to the topic of the U.S. currency and attributed the exchange rate’s behavior to people who want to “live off financial speculation.” Regarding the state of government accounts, however, the president acknowledged that there is indeed room for cuts in the budget but reaffirmed that he will not take money from social programs.

With the economic policy under scrutiny, the meeting turned into an act of support for Finance Minister Fernando Haddad, who was also present at the event. Leaders of the National Confederation of Industry (CNI), Brazilian Federation of Banks (FEBRABAN), and unions praised the head of the economic team and highlighted the positive numbers of the Brazilian economy.

Mr. Haddad reviewed his management, reinforced the commitment to balancing government accounts, and tried to project a positive image of the economy, saying that the country will grow more than 2.5% per year and reduce inequality under this government. He also said that “expectations indicate” the lowest average annual inflation rate “in a government cycle in the entire history of the Real Plan (a set of measures implemented in Brazil in 1994 to stabilize the country’s economy),” below 4% per year, and the “expectation of having the highest level of public and private investment of the decade.” “We are experiencing the greatest growth in family income and the largest reduction in poverty in the last 10 years,” the minister said.

Finally, the finance minister sought to downplay speculations about disagreements he supposedly had with the president. On this, he said he had never been overruled.

“We have had a fiscal problem in Brazil for 10 years. It started in 2015 and has not ended until today. You, President [Lula], decided to face this issue [fiscal imbalance] and never overruled the Ministry of Finance in the pursuit of balancing the accounts,” Mr. Haddad said.

On Thursday, Mr. Lula also reiterated that he is in no hurry to appoint Roberto Campos Neto’s successor at the Central Bank — the current president’s term ends in December. Following recent criticisms, the president said Mr. Campos Neto “took a wrong path.” Then, without mentioning names, the president said he would appoint someone to the Central Bank with a “commitment to Brazil and the people.” “It cannot be someone who makes mistakes,” pondered the president.

On this topic, Mr. Lula was asked if he would consider appointing the Central Bank’s director of Monetary Policy, Gabriel Galípolo, to head the monetary authority. In response, he praised Mr. Galípolo but said he had not discussed succession with him. “Galípolo is a golden boy, highly competent, with unparalleled honesty,” he said.

Nevertheless, he defended that the next Central Bank president must explain when raising or lowering interest rates. “We will have a serious Central Bank president who will not mess around. When he says he has to raise interest rates, he must explain why he will raise them,” he added.

*Por Renan Truffi, Raphael Di Cunto, Gabriela Pereira — Brasília

Source: Valor Iternational

https://valorinternational.globo.com/