Brazil Sugar Mogul Says Lula’s Fiscal Plan Will Keep Rates High

(Bloomberg) -- The chairman of Brazilian sugar giant Cosan SA criticized the fiscal policy of President Luiz Inacio Lula da Silva’s government, saying the reforms don’t reduce public debt and will keep interest rates high.

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Billionaire Rubens Ometto said the fiscal framework project — aimed at shoring up Brazil’s public finances — allows the government to boost spending as revenue increases, instead of reducing debt and lowering borrowing costs.

The fiscal framework is “based on the idea of ​​allowing expenses to increase as revenue increases,” Ometto said Saturday at an event in the city of Guaruja, on the coast of Sao Paulo state. “When they make this increase in revenue, they are taking money from those who work efficiently, from those who create jobs, from those who produce, and passing it on to the executive branch which does not have this ability.”

Brazil’s tax reform was approved only through concessions and the government has since sought to change the rules to be able to raise more revenue, he added.

The legal uncertainty confronting Brazil’s institutions — including companies — has also contributed to making money more expensive, Ometto said.

“If the government organized all this and controlled the fiscal issue, interest rates would fall for the right reasons and then this country would grow again, develop again,” he said.

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