Brazil’s Finance Minister Dario Durigan said on Friday that the government programme of President Luiz Inácio Lula da Silva, the PT candidate for re-election, includes a fiscal adjustment that avoids sudden shocks to the economy. In an interview with UOL, he said an adjustment of R$200 billion in a single year is not possible.
Durigan spoke as a representative of Lula’s campaign. He said the government wants to improve the fiscal position, but without setbacks. “We have to improve the fiscal position, but without setback,” he said. “It is not possible to do R$200 billion as they are saying.”
The campaign’s proposed path
Analysts have raised concern about the trajectory of public accounts. They argue that recurring fiscal deficits put pressure on interest rates and public debt.
The opposition’s promise
The campaign of Flávio Bolsonaro has promised a faster fiscal adjustment, described as a “tesouraço” in spending.
Economists are sceptical of a large, rapid adjustment. They point to commitments on social programmes, real minimum wage and pension increases, and the absence of deep cuts in health and education.
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Debt benchmark
The Instituição Fiscal Independente (IFI), linked to the Senate, estimates that a primary surplus of 2.1 percent of GDP a year is needed to stabilise public debt, according to its June Fiscal Monitoring report. The second round of Brazil’s elections is on Sunday, the 25th.
