Copom minutes came with “more consistent terms”, says Haddad

The minutes of the Monetary Policy Committee (Copom), released this terTuesday (28), in Brasília, came with a more moderate tone than the communiqué issued last week, said, today, the Minister of Finance, Fernando Haddad. In a conversation with journalists upon arrival at the ministry, he attributed the softening of the tone to the longer preparation time for the document, which comes out six days after the Copom meeting.

“Like what happened at the previous meeting, the minutes, with more time to prepare, came with terms that are more consistent with future perspectives, of harmonizing fiscal policy with monetary policy,” declared the minister.

Haddad asked for collaboration between the Central Bank (BC) and the economic team to coordinate fiscal (which takes care of revenue and public spending) and monetary (interest rate to curb inflation) policies. According to him, the union is necessary for the country to grow with low inflation.

“The Central Bank also needs to help us. It is an organism that has two arms, one helping the other. I always insist on this thesis, because it gives the impression that one is a spectator of the other. This is not how economic policy is supposed to work. There are two active sides, competing for the same purpose, the same objective, which is to guarantee growth with low inflation”, said the minister.

Early this morning, the BC released the minutes of last week’s Copom meeting, which maintained the Selic Rate (basic interest rate) at 13.75% per annum.

According to the document, Brazilian inflation is slowing down and controlling prices requires “serenity and patience”. The BC highlighted the continuity of uncertainties in relation to the economy, such as the increase in public spending and the high public debt. The minutes, however, pointed out that the new fiscal rules that will replace the spending cap could bring relief in inflation expectations, provided it has “credible parameters”.

Last week, Haddad had considered it “very worrying” the statement issued by BC after the Copom meeting. For the minister, the release of the Expenditure Revenue Assessment Report, on the 22nd, demonstrated the government’s commitment to rebalancing the public accounts and would be a reason for the BC to start making monetary policy more flexible, instead of hardening the tone in the communiqué.

Tax framework

Regarding the new rules that will replace the spending cap, Haddad said that terthere will be a “conclusive” meeting this fourth(29) as chief minister of the Civil House, Rui Costa.

“As Minister Rui had slight health problems and remained in Bahia, we left it for tomorrow (fourth-Friday) the meeting on the fiscal framework to verify the possibility of him being able to participate”, declared Haddad, adding that the meeting could be face-to-face or virtual.

Although the Constitutional Amendment of the Transition establishes until August the deadline for the government to send a complementary bill with the new fiscal framework, Haddad said that the maximum period with which he works to forward the text to Congress is until April 15. On that date, the government must submit the draft Budgetary Guidelines Law (LDO) for 2024, already with the new parameters that will guide next year’s Budget in line with the new model.

According to the minister, it is possible that the government publishes the rules a few weeks before they are sent to Congress. “But this (the deadline until April 15) does not prevent us from already saying what the new rule of the new fiscal framework will be”, he said. Haddad revealed that the government is doing a strong job to combat tax evasion and is reviewing some exemptions.