Bolsonaro proposes debt ceiling measure as potential presidential candidate

Brazil’s Presidential Campaign Enters Final Stretch with Debt Ceiling Proposal

Senator Flavio Bolsonaro has announced that if elected president, he will implement a debt ceiling to control public spending. Adolfo Sachsida, a new economic adviser to the campaign, stated in a social media post that the measure would help improve Brazil’s fiscal reputation and reduce spending.

Bolsonaro is running against leftist President Luiz Inacio Lula da Silva in this year’s presidential election. A recent poll found the two candidates in a near-tie, with Lula leading by 46% to Bolsonaro’s 45%. The economy is expected to be a key factor in the race.

Bolsonaro’s campaign has warned that another Lula victory would lead to a recession. Brazil’s public debt is approximately 82% of its gross domestic product (GDP), an increase of over 10% since Lula returned to office in 2023.

Sachsida, who was appointed as the minister of mines and energy under Jair Bolsonaro in 2022, previously suggested a similar debt ceiling measure with automatic spending cuts when public debt exceeds 65% of GDP. This proposal is based on a constitutional amendment passed by Brazil’s legislature in 2016, which limited federal spending increases to the inflation rate of the previous year.

Lula has implemented a new fiscal framework that combines primary balance targets with increases in real expenditure between 0.6% and 2.5% per year. His campaign has highlighted successes under his administration, including an increase in Brazil’s currency value and lower unemployment figures.

The presidential election is also being influenced by external factors, including interference from United States President Donald Trump. Trump has previously used threats and economic leverage to support his preferred candidates, including Bolsonaro. However, the impact of Trump’s tariffs on Brazilian exports on public sentiment remains unclear.

Source: Al Jazeera