A recent wave of political and economic developments has placed growing pressure on President Lula’s administration, both in public opinion and within the government’s legislative base. According to a new Quaest survey, Lula’s disapproval rating has reached its highest level since the beginning of his term, while approval has dropped to a record low. In response to declining support, the president has announced a package of new social programs — including subsidies for cooking gas, home renovations, and motorcycle financing — aimed at appealing to key segments of the population. At the same time, Finance Minister Fernando Haddad is preparing a package of long-term fiscal measures to adjust public accounts and reevaluate the recent increase in the IOF, despite market resistance. Politically, the Planalto Palace faces growing instability, with signs of disloyalty emerging among coalition parties. The urgent request for the controversial amnesty bill served as a clear warning, prompting the government to reassess political appointments.
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Increased Disapproval
President Lula’s (PT) disapproval rating has risen to 57% of Brazilian voters, according to a Quaest survey released on Wednesday (04/06), marking the worst level since the beginning of his term. Approval of the president’s administration fell to 40%, also the lowest point since he took office. Both changes fall within the survey’s margin of error of 2 percentage points. The survey, commissioned by Genial Investimentos, was conducted between May 29 and June 1, interviewing 2,004 Brazilians aged 16 and over. The confidence level is 95%.
New Social Programs
On Tuesday (03/06), President Lula (PT) announced a series of social programs the government plans to launch this year. He listed three key initiatives: a program for the purchase of cooking gas, one for home renovation, and another for motorcycle financing. Lula also mentioned a fourth initiative aimed at truck drivers — a plan that, according to him, was so new that not even the Minister of the Secretariat of Communications of the Presidency, Sidônio Palmeira, was yet aware of it.
Tax Increase
Finance Minister Fernando Haddad stated on Tuesday (03/06) that he will present a package of long-term fiscal adjustments to the National Congress. These measures are meant to fine-tune a decree, increasing the IOF (Tax on Financial Transactions). The package, according to Haddad, will include at least one proposed constitutional amendment (PEC), one bill, and possibly a provisional measure. Discussions with the presidents of the legislative houses became necessary following backlash from the business community and financial markets over last month’s decree to raise the IOF to balance the year’s budget.
Revenue Increase
Finance Minister Fernando Haddad announced an agreement with Congress to revise the decree that raised the IOF (Tax on Financial Transactions), reducing its scope in response to criticism from the market and legislators. To offset the expected loss in revenue, the government will introduce new measures focused exclusively on boosting revenues in the short term, with structural spending cuts left for future negotiations. Among the announced initiatives are an increase in the taxation of sports betting, adjustments to the tax framework for financial institutions, and the introduction of a 5% income tax on currently exempt securities such as LCIs (Real Estate Credit Bills) and LCAs (Agribusiness Credit Bills). According to three congressional sources, Haddad also raised the possibility of changes to the JCP (Interest on Equity) mechanism during the meeting.
More Loyalty
Amid a string of defeats in Congress, the Secretariat of Institutional Relations (SRI), led by Minister Gleisi Hoffmann, has been reviewing political appointments made by members of the governing coalition. The effort aims to secure stronger loyalty from allied lawmakers but is viewed as politically delicate within the Planalto Palace. To avoid deepening existing cracks in the fragile parliamentary base, these conversations have been conducted through party leaders, who have also defended the retention of key appointments.
Amnesty Bill Was the Trigger
Support for the urgent request on the amnesty bill served as the trigger for the current review of political appointments. Of the 264 signatures supporting the urgency request, 146 came from representatives in parties that are formally aligned with Lula’s government and holding ministries. While the bill has stalled under the influence of Speaker Hugo Motta (Republicanos–PB), the high level of support among coalition lawmakers has underscored the Planalto’s fragile hold over its base in Congress.
Analysis:
President Lula’s administration is entering a phase of growing political strain, marked by a decline in public support and signs of discontent within its congressional base. The latest Quaest poll shows a record-high disapproval rating, reflecting public frustration with the government’s performance and possibly its handling of economic challenges. In response, the announcement of new social programs signals an attempt to reengage key voter segments, particularly low-income groups and informal workers.
At the same time, the government’s difficulty in maintaining unity within its coalition reveals a deeper problem in political coordination. The support from allied lawmakers for the urgent request on the amnesty bill — against the government’s preferred timing — has made evident the fragility of the Planalto’s congressional support. The subsequent review of political appointments indicates a reactive strategy to enforce discipline, but it also risks creating further tension among parties.
Sources: O Globo [1], [2], [3]; A folha de SP [1], [2]; G1 [1], [2].
