Haddad says Lula will act as controller of investments in Petrobras

BRASILIA – THE finance Minister, Fernando Haddadstated this Wednesday, 27, that the president Luiz Inácio Lula da Silva will act as controller of the Petrobras, both in relation to pricing and investment policy, so that the company invests more in strategic areas for the government, such as, for example, in an ecological transformation plan. The statement was made in an interview with CNN.

According to him, the government is encouraging investments “including in research and development focused on green hydrogen”. “I don’t think this is an intervention,” he said.

When asked about other companies, he mentioned that, in the case of Eletrobras, discussing the Union’s representation on the board is not abnormal and also does not constitute intervention.

The Lula government has been criticized for trying to interfere in the management of large companies. The most recent example was the decision by Petrobras’ board of directors to withhold the payment of extraordinary dividends to shareholders, totaling R$43 billion, in a decision by President Lula himself. The announcement frustrated the market and caused the state-owned company to lose around R$56 billion in market value in a single day.

Petrobras is a mixed capital company whose largest share holder is the Brazilian government, which has a majority on its board (six of the 11 seats). Shortly after the decision, the president of the state-owned company, Jean Paul Prates, took to social media to respond to the questions. “It is legitimate that the CA (Administrative Council) take a position guided by the President of the Republic and his direct assistants, who are the ministers. That’s exactly what occurred,” he said.

Haddad mentioned that the role of the Treasury is to contribute to a good business environment in the country, which includes calming market sentiments when there is noise about government actions with state-owned companies.

Economic guidelines

The Finance Minister stated that the economic agenda in Congress will move forward in 2024. “Everything is moving forward,” he said, without specifying the projects. Asked about the impact of municipal elections on the progress of these issues, such as Income Tax reform, Haddad said that the Treasury does not control the electoral calendar and that the Department is dedicated to formatting the texts of the consumption reform regulations.

These texts must be delivered to Congress in the first half of April. He stated that he believes that the regulation can be approved in the Chamber in the first half of the year and that he sees room for advancement of other texts on the microeconomic agenda.

Haddad reiterated that the Treasury has a good relationship with Congress, a direct line, and warned that there is only concern when polarization puts at risk issues that are crucial to the country’s future, such as tax reform on consumption. He recalled the pressure from the opposition to block the progress of the text, which ended up approved and promulgated in 2023.

Growth in 2024

Haddad stated that the Brazilian economy will grow more in 2024 than Pasta’s projections, currently at 2.2%. “Our technicians will have to review projections, I doubt Brazil will grow very little,” he said.

Haddad commented that he does not see much uncertainty in the short-term horizon for the conduct of monetary policy and that the tendency is for the external scenario to improve by mid-year. In Brazil, he mentions a cooling of inflation, mainly in food, and the window of opportunity for a positive growth cycle.