Brazil's Finance Minister on Upcoming Fiscal Measures

BRASILIA (Reuters) – Brazil's Finance Minister Fernando Haddad announced on Monday that fiscal measures to support the country's fiscal framework might be revealed this week. He mentioned that the government is in the final stages of preparing for the announcement.

Speaking to reporters, Haddad noted that President Luiz Inacio Lula da Silva is expected to contact him later on Monday for a meeting regarding this matter.

> "After the meeting with him, I'll speak with you," he said.

The minister had previously indicated that the government would reveal measures following the municipal elections at the end of October. These are designed to ensure the longevity of fiscal rules approved by leftist Lula last year.

The fiscal framework is intended to cap overall spending growth above a certain limit relative to inflation. However, many mandatory expenses, such as social benefits and pensions, are growing at a faster rate, limiting the scope for investments and operational expenditures.

Many economists caution that without reforms to manage expenditures, the fiscal framework could become unsustainable in a few years.

Uncertainty regarding the fiscal outlook and forthcoming government measures has impacted Brazilian asset prices, weakening the real against the U.S. dollar and increasing future interest rates. Following the minister's remarks on Monday, the local currency strengthened by 1.6%.

On Sunday, the Finance Ministry announced that Haddad had canceled a planned trip to Europe at Lula's request to focus on domestic issues.
> "As the president asked me to stay, and since things are technically very advanced, I believe we will be able to make the announcement this week," he said.