Todd Martinez, senior director, and co-head of the Americas for sovereigns at Fitch Ratings: “The Lula administration’s proposed fiscal framework and tax reform efforts represent its first major legislative initiatives and, taken together, the cornerstone of its economic program. They could have positive implications, as signaled by the IMF’s strong support. From a macroeconomic perspective, the fiscal framework is crucial for anchoring expectations around improvement in public finances, which could help allay market uncertainties, facilitate a loosening of tight monetary policy, and thus support a virtuous cycle for growth. The tax reform efforts are crucial for making this framework viable, given the latter will limit spending but require much reduction, and are also a centerpiece of the microeconomic agenda. Although these seek to lift an already high tax burden, they aim to do so via narrowing exemptions, increasing progressivity and reducing complexity, so as to boost rather than hamper the growth outlook. But skepticism and uncertainty remain high. The government’s plans for higher spending are in motion, while these tax plans are not…”