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Lula-Many Things Considered Gov't Spending Should Be Seen As Investment

BRAZIL

Brazilian President Elect Luiz Inacio Lula da Silva speaking earlier today delivered comments on the economy that veered closer towards his leftist governing persona seen in previous terms as president in the mid 2000s, as opposed to the more moderate, market-friendly face he sought to portray during the October presidential election campaign.

  • Wires carried comments from Lula stating that what the market calls gov't spending, he considers investment, adding that those who talk of a spending cap should instead focus on social issues.
  • Raised concerns that Lula could tack the spending commitments made in his campaign, totaling BRL160-200bn (USD-30-37bn), onto next year's budget.
  • However, Lula faces a major obstacle in getting these measures through in the form of a Congress where his leftist Workers' Party and its allies do not hold a majority. Will require support of moderate parties in the 'centrist bloc' to get measures through, blunting the prospect of major spending hikes.
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EM BulletHomepagemarkets-real-timePolitical RiskPolitical Risk BulletBulletEmerging Market NewsPolitical Market News

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