Brazil’s President Luiz Inacio Lula da Silva ordered his economic team on Wednesday to comply with the country’s fiscal framework, and approved suggestions of spending cuts, the country’s finance minister told journalists.
Brazilian assets had suffered a sell-off in recent weeks as markets feared fiscal deterioration amid a government reluctance to cut spending, which led to investors’ concerns about the government’s ability to comply with the fiscal framework approved last year.
On Wednesday, however, the Brazilian real rose nearly 2% against the U.S. dollar in spot trading, as market participants awaited details from Lula’s meeting with his economic team, and after the president said earlier in the day that his government would remain committed to fiscal responsibility.
“The first thing the president ordered us to do was ‘comply with the fiscal framework’,” Finance Minister Fernando Haddad told journalists in Brasilia after the meeting, referring to a constitutional law that sets a limit to government spending.