Reporting by Marcela Ayres, Reuters

BRASILIA
Energiesnet.com 04 05 2023

Brazil finance minister Fernando Haddad said on Tuesday that a tax on oil exports adopted by the government to boost federal revenue would end within four months and that fuel taxes would be fully resumed afterward.

Speaking at an event hosted by Bradesco BBI, Haddad said the measure to tax exports, highly criticized by private oil companies, was essential to ensure that the government of new President Luiz Inacio Lula da Silva ends this year with a primary deficit below 1% of GDP.

Once the original 120-day deadline is up, gasoline and ethanol taxes that had been partially resumed will be fully charged, he said. Federal taxes on fuels were cut to zero last year by former President Jair Bolsonaro in order to lower prices ahead of a re-election bid.

Haddad said the government does not want to anticipate a debate on changing inflation targets, adding that will happen once future targets are to be defined.

Typically, the National Monetary Council (CMN), consisting of the finance minister, planning minister, and the central bank governor, decides the annual inflation target three years in advance at its June meeting.

Amid repeated criticism from Lula on the current level of interest rates, which have been kept steady at a six-year high of 13.75% since September, Haddad said dialogue with the central bank is ongoing in a “challenging scenario” due to the bank’s formal autonomy.

He expressed confidence that the new leftist government will manage to stabilize macroeconomic indicators, allowing for “monetary policy consistent with fiscal policy.”

Haddad also defended the viability of the primary budget targets established in its recently presented fiscal framework, including zeroing the deficit by 2024, arguing that the results will be achieved mainly by correcting significant tax distortions rather than through tax or rate increases.

He said the broad consumer debt renegotiation program, called Desenrola, is waiting for development of its operational system, a task that the Brazilian stock exchange B3 will carry out.

Reporting by Marcela Ayres; editing by Jonathan Oatis and Bill Berkrot

reuters.com 03 04 2023