Read the letter from economists to Lula in full!

MONEY NOW intro: “After the controversy involving the financial market the Transition PEC, which intends to exclude the resources to make possible the Bolsa Família of R$ 600 reais from 2023, the economists Arminio Fraga, Edmar Bacha and Pedro Malan published a open letter to the president-elect in Folha de S. Paulo, this Thursday (17).

In it, the president stated: “Why are people made to suffer on account of guaranteeing this country’s fiscal stability? make a spending cap? Why don’t the same people who seriously discuss spending caps discuss the social issue in this country?”.

“Dear president-elect Lula, We attended your speech this Thursday (17) early at COP27, in Egypt. Believe that we share your social and civilizing concerns, your reason for living. It is not possible to live with so much poverty, inequality and hunger here in Brazil.The challenge is to take measures that do not create bigger problems than the ones we want to solve. The rise of the dollar and the fall of the stock market are not the result of the action of a group of malicious speculators. Fiscal responsibility is not an obstacle to the noble yearning for social responsibility, either now or as soon as possible. The spending ceiling does not take money from education, health, culture, to pay interest to greedy bankers. It is not a conspiracy to dismantle the social area.

The same fear that affects interest rates also affects the dollar. We imagine it is a source of great frustration to see all this. Is your record of fiscal discipline enough? The truth is that recent speeches and appointments and the PEC (proposed amendment to the Constitution) now under discussion suggest that it is not enough. Sorry for the frankness. As you know, we support your election and hope for a better and fairer Brazil. It is necessary to understand that interest rates, the dollar and the stock market are the product of everyone’s actions in the economy, inside and outside Brazil, especially the government itself. A lot of serious and hardworking people, president. We must not forget that a high dollar means a certain wage squeeze, caused by the inflation that comes with it. We’ve known this for decades. The unions know. And it also bears remembering that the Stock Exchange is now a relevant source of capital for real investment, a channel that has been clogged.

The financial sector receives interest, yes, but it provides services and passes on a good part of the interest to the rest of the economy, which deposits its resources there. The ceiling, now on the way to being converted from a hole to an open hole, was an attempt to force an organization of priorities. Why that? Because it is not possible to do everything at the same time without putting pressure on prices and interest rates. The outside world is full of examples of this.

 Public credit in Brazil is evaporating. Time to take action, under penalty of the people taking it in their heads again. Respectfully, Arminio Fraga, Edmar Bacha and Pedro Malan.”