BRASILIA (Reuters) -Brazil’s leftist President-elect Luiz Inacio Lula da Silva said on Thursday that many expenditures considered government spending should instead be seen as investments, rattling markets still unsure on the details of his economic policies.
Lula insisted he would maintain fiscal responsibility, but his comments added to growing investor skepticism that he would keep a lid on spending. Concerns have been mounting about Brazil’s public finances after major outlays through the pandemic and this year’s presidential election.
Brazil’s currency and benchmark Bovespa stock index both fell over 3% in morning trading. Inflation data added to pressure, as Brazilian consumer prices rose more than expected in October after three straight months of declines.
Lula has not yet designated his finance minister and said he would consider his Cabinet picks only after returning from the COP27 climate summit next week. But his advisers are already discussing with lawmakers how to open room for more spending outside a constitutional spending cap in order to deliver on campaign promises.
Lula also said that state-owned companies would now be “respected,” seeking to draw a contrast with the pro-privatization policies of outgoing President Jair Bolsonaro. State oil company Petroleo Brasileiro SA would not be carved up, Lula said, while state lenders Banco do Brasil and Caixa Economica Federal would not be privatized.
(Reporting by Lisandra ParaguassuWriting by Gabriel StargardterEditing by Brad Haynes)
