Lula’s March of Folly: Fundo Verde says PT learned nothing from Dilma’s disaster

O Green Background criticized the performance of the newly elected government of Luiz Inacio Lula da Silva in your November monthly letter. According to the fund, one of the largest in the industry, “the march of fiscal folly continues unabated in Brasília”.

In the letter, the Green says that the elected government accepted a reduction of thirty billion in expenditures outside the cap in the “PEC da Gastança”, and then approved in the Senate a complement of twenty-five billion outside the cap coming from inactive PIS/Pasep accounts.

“The PEC, after much theatrics, is leaving the Senate with expenditures of two hundred billion reais outside the ceiling. There is absolutely no commitment to any fiscal responsibility, and the reading of the preamble of the PEC still brings a pearl citing MMT (Modern Monetary Theory) as justification for this party”, he says.

Last night, the proposal to expand the spending ceiling by R$ 145 billion for a period of two years, in addition to removing up to R$ 23 billion in extraordinary revenues from the fiscal anchor, was approved last night at the Senate🇧🇷 The next step is the analysis of the Chamber of Deputies🇧🇷

Adding it all up, the value could reach up to R$ 168 billion, less than the R$ 200 billion that the market came to price. Still, caution prevails.

“A country with the inflationary history of Brazil and interest rates of 13.75% playing with this type of argument shows that, definitely, the PT learned nothing from the government disaster Dilma“, puts.

Last month, the fund reduced exposure on the Brazilian stock exchange, and maintained a short position on the US stock exchange.

“We maintained a long position in implicit inflation in Brazil, added a small position applied in real interest, and continued to be taken in interest in the Europepurchased at gold and Petroleum“, ends.