Senator Flavio Bolsonaro, President Lula's main rival in the October presidential election, has pledged to establish a ceiling on public debt. His economic advisor, Adolfo Sachsida, detailed the measure on social media on Wednesday.
The announcement came from Adolfo Sachsida, an economist and lawyer who joined Flavio Bolsonaro's campaign team last week. In a video posted on X, he stated: "We will approve a ceiling for public debt. If the debt is too high, a spending limitation mechanism will automatically trigger, bringing the budget trajectory back onto a sustainable path." The stated objective is to improve Brazil's fiscal credibility and contain government spending.
Before joining the campaign, Sachsida had indicated that this ceiling could resemble the one Brazil experienced "in the recent past," with automatic cuts triggered as soon as gross public debt exceeded 65% of GDP. For comparison, this debt currently stands at approximately 82% of GDP, an increase of more than ten percentage points since Lula's return to power in 2023.
The proposed mechanism is reminiscent of the constitutional amendment adopted in 2016 under the presidency of Michel Temer, which limited the growth of federal spending to the previous year's inflation rate. This rule was relaxed several times before being replaced in 2023 by Lula's fiscal framework, which combines primary balance targets with a real increase in spending of between 0,6% and 2,5% per year.
The son of former far-right president Jair Bolsonaro, Senator Flavio Bolsonaro is the Liberal Party's candidate for the October presidential election. His father, sentenced to 27 years in prison for his alleged involvement in an attempted coup after his defeat to Lula in 2022, officially nominated him last December.
Polls show the two candidates neck and neck. A Nexus survey published this week shows them virtually tied in the first round. In the event of a runoff, Lula would win by a narrow margin with 46% of the vote against 45% for Bolsonaro. Other polls give the incumbent president a slightly stronger lead.
The economy is shaping up to be the central battleground of this campaign. While inflation has slowed and unemployment has reached historically low levels in recent months, the Bolsonaro campaign warns that a Lula re-election would lead to a recession. High interest rates remain a point of contention, while Lula emphasizes the strengthening of the Brazilian currency and his poverty reduction programs.
The Brazilian presidential election is also taking place under the threat of interference from US President Donald Trump , who is considered close to Bolsonaro's camp. Last year, Trump imposed heavy tariffs on certain Brazilian exports to put pressure on the Brazilian judiciary in the Jair Bolsonaro case. How these tariffs might influence public opinion before the election remains uncertain.
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