Haddad Rules Out Tax Increases as Dollar Plunges: Is the Government Ignoring the Currency Crisis?

After the first meeting of 2025 with President Lula, Finance Minister Fernando Haddad said that the dollar is adjusting naturally. He ruled out increasing the IOF to control the dollar's rise. "We are not going to change the exchange rate regime or increase taxes because of this. We are adjusting the fiscal base with proposals sent to Congress," Haddad said on Monday (6).

The dollar fell against the real on Monday (6), following the global trend, after news that US President-elect Donald Trump will adopt a more moderate stance on import tariffs. At 11:42 am, the dollar was down 0.65%, quoted at R$ 6.1395.

"Regarding the dollar, there is a natural adjustment. We had stress at the end of last year all over the world and in Brazil. Today, the president-elect of the United States [Donald Trump] made more moderate statements. It is natural for things to adjust," explained Haddad.

The meeting between Haddad and Lula focused on the 2025 economic agenda and the vote on this year's budget. According to Haddad, the approval of the budget is the government's priority at the beginning of the year. The minister returned to Brasília early after his vacation was canceled. The Ministry of Finance reported that he canceled his vacation after the recovery of a family member who underwent surgery at the end of the year.

Congress did not approve the 2025 budget in December. Even so, the federal government will be able to pay mandatory expenses, such as salaries, pensions and health services. Other expenses may be limited to 1/12 of the amount planned per month. "At the beginning of the year, discussions are slower. We need to talk to the rapporteur [Senator Angelo Coronel] to adjust the budget to the new laws approved at the end of last year," said Haddad. Senator Angelo Coronel postponed the budget vote to include the government's new fiscal measures.

Is it just me or are they really sinking Brazil? Let us know what you think!!

Source: CNN Brasil