Fiscal adjustment becomes an election campaign issue in Brazil — MercoPress
In Brazil, ahead of the general elections on October 4, the future reduction of public spending has become one of the main campaign issues. President Luiz Inácio Lula da Silva and Senator Flávio Bolsonaro promise to carry out a fiscal adjustment, but have not specified which sources they plan to use to finance it, MercoPress reports.
Brazilians will elect the president, governors of 27 states, all members of the Chamber of Deputies, and two-thirds of the Senate. If no candidate receives more than half of the valid votes, a runoff will be held on October 25.
Differences in polls
Polls show a narrow gap between Lula and Bolsonaro. According to Quaest data for O Globo, in a possible runoff Bolsonaro has 42% support and Lula 40%; in the first round, Lula receives 36% and Bolsonaro 31%. A BTG Pactual/Nexus survey gave Lula 47% and Bolsonaro 46%, while AtlasIntel/Bloomberg reported 47.2% and 46.8%, respectively. The results of the cited runoff models are within the surveys’ stated margins of error.
The discussion on public finances intensified after Lula’s meeting with business and banking representatives at the Alvorada Palace in late August. According to Brazilian press reports, participants stressed the need for a fiscal adjustment due to the rising public debt. On the same day, the government presented its 2027 budget proposal, which provides for a primary surplus of 0.5% of GDP, including through cuts in spending on civil servants’ wages.
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Debt and social payments
According to official and private estimates, Brazil’s public debt stands at around 82% of GDP, while Trading Economics forecasts 83.5% of GDP for 2026. The central bank expects the economy to grow by 2% in 2026, while the IMF forecasts 2.4% this year and 2.2% next year.
During the campaign, Lula cites unemployment at 5.4% in July, inflation of 4.22% in August, and an increase in the minimum wage above the inflation rate. At the same time, Datafolha recorded 50% disapproval of his performance against 47% approval. The president also announced a 15% increase in Bolsa Família payments from October — approximately from 620 to 715 reais per month for 20 million families. The government’s economic team said the funds would be secured through cuts in other spending items.
According to the publication, 82% of Brazilian households have debts, and one-third of them are overdue on at least one payment.
