Criticism of Brazilian President Luiz Inacio Lula da Silva’s economic policies intensified after Brazilian markets collapsed just two days after his inauguration, Reuters reported.

One of the main targets of the attacks is Finance Minister Fernando Haddad, a Lula loyalist who tried unsuccessfully to win the 2018 presidential election for the Workers’ Party.

O Estado de S. Paulo, a newspaper in his hometown, described Haddad on Wednesday as a “jewelry minister” after Lula ordered the extension of the fuel tax exemption, which will have wide-ranging budgetary implications.

Haddad, a former mayor of Sao Paulo, took office promising to rebalance public finances and introduce a sound fiscal system after Congress in Brasilia passed a massive social spending package backed by Lula.

Lula da Silva, who was sworn in for a third term on January 1, said eradicating poverty and hunger would be the “landmarks” of his government, raising fears of further spiraling public spending and a lack of fiscal discipline.

Financial analysts accuse the Brazilian government of “deafness”

Markets reacted poorly to his first days in office, with O. Estado de São Paulo noting that “Haddad knew from day one that he would be a figurehead, a sort of courier for President Lula.”

The conservative daily, which has not been shy about criticizing former right-wing president Jair Bolsonaro, added that Haddad had been “discredited from day one” and that he should learn to say no to Lula.

Analysts at Citigroup said on Tuesday that both Lula and Haddad “overall left the impression of a government that is deaf, at least to what the financial markets want to hear.”

Strategists at Canadian investment bank BMO Capital Markets told clients that statements made by two Brazilian officials suggested that a situation could arise where “inflation will pick up and the key interest rate cuts through the window.”

The real, Brazil’s national currency, has depreciated 3.8% against the dollar over the past 3 trading sessions, hitting its lowest level since July 2021, while the benchmark Bovespa index has fallen 5% year-to-date.

Markets were also rattled on Tuesday by comments from labor and social security ministers in Lula’s new government, which has no fewer than 37 portfolios.

Strange comments by Lula’s ministers

Carlos Lupi, the social assistance minister, baffled analysts after he said the social security system had no deficit, even though figures released by the Brazilian Treasury showed it had accumulated a deficit of 267.9 billion between January and November last year. reals, about 49 billion dollars.

He later announced that the new government would have to review the pension reform approved by the Bolsonaro administration, which was welcomed by investors.

Luis Marinho, Brazil’s new labor minister, in turn said the new administration would focus on regulating labor relations through mobile phone apps and digital platforms.

Analysts at Guide Investimentos noted that their statements indicate that “the government remains on track to undo the liberal reforms adopted by the last two presidents.”

Adding to all this is the fact that Lula ordered the government to reverse the privatization process of some large state-owned companies, including the oil giant Petrobras, started under Bolsonaro.