Less Than a Week After Lula's Re-election Win, His Own Camp Draws Red Lines on Fiscal Tightening as Brazil's Public Debt Hits 82.9% of GDP
Brasilia — Less than a week after Brazilian President Luiz Inácio Lula da Silva won re-election, members of his government and his Workers Party (PT) are drawing red lines around potential tougher fiscal measures. Reuters reported on October 30 that Institutional Relations Minister José Guimarães told reporters the issue of fiscal adjustment "was not discussed, is not being discussed, and certainly is not being discussed within our caucus." Presidential Secretary-General Guilherme Boulos wrote on social media that the pledge of spending cuts had lost the election, arguing that any adjustment should rely solely on reducing Congress budget earmarks and tax breaks. The PT's executive committee issued a statement the same day saying controls on spending should not come at the expense of the poor.
Investors had been hoping for signs that the new administration would tackle Brazil's rising public debt, which has climbed more than 11 percentage points during Lula's presidency to 82.9 percent of gross domestic product, as fiscal uncertainty drives up government borrowing costs. Finance Minister Dario Durigan said the government will pursue a higher effective primary surplus next year and plans to send legislation to Congress this year requiring policymakers to formally target the midpoint of the primary balance goal — a surplus of 0.5 percent of GDP — rather than the lower end of the fiscal framework's tolerance band.
Analysts say the market reaction stems from the government's lack of urgency in showing how it intends to address the debt. Attention has turned to who will lead the finance ministry and whether that person will have the political capital to overcome internal resistance to spending restraint. Lula's fourth term begins on January 5, 2027.
(Source: Reuters)
Source: Reuters
Published by GSM · USA (original Chinese edition)
Photo: 图：巴西总统卢拉。照片 CC BY-SA 4.0，作者 Ricardo Stuckert，经 Wikimedia Commons。 / Photo: Brazilian President Luiz Inácio Lula da Silva. CC BY-SA 4.0, by Ricardo Stuckert, via Wikimedia Commons.
