Brazilian President Luiz Inacio Lula da Silva said on Saturday (12) that the government needs to invest rather than pursue fiscal surpluses to stimulate economic expansion and employment. Speaking at a campaign rally in Curitiba as he runs for re-election in the October presidential election, Lula pushed back against strict fiscal control, arguing that the nation’s true burden stems from high borrowing costs.
Rhetoric clashes with fiscal plans
Lula argued that public investment remains crucial to generating jobs and sustaining broader economic growth across the country. He targeted borrowing costs directly. Public debt rose by 10 percentage points during his current administration, while debt reached 82 percent of GDP in June. Brazil’s annual Selic policy rate stands at 14 percent.
“To generate jobs, the economy has to grow, and for the economy to grow, the government has to invest,” Lula said. “And for the government to invest, it is necessary to stop this nonsense of generating a surplus, generating a surplus, of having fiscal control. Because Brazil’s big debt is the interest rate we pay, 1.3 trillion reais. The rest is investment.”
Deficit projections and targets
The president’s remarks diverged from his campaign filing submitted to the Superior Electoral Court, which pledges responsible fiscal policy to help lower domestic interest rates. Finance Minister Dario Durigan previously stated that the government would aim to return to primary budget surpluses starting in 2027. In the budget proposal sent to the National Congress, the administration projected a positive budget balance of 18.6 billion reais.
Lula also pointed to earlier fiscal improvements during the Curitiba event. “When I came back now, this country was destroyed,” Lula said. “The deficit was 2.8 percent. The last one was 0.8 percent and, now, it will be positive. We are going to generate a surplus.” His potential new term envisions a fiscal accounts adjustment of 2 percentage points of GDP.
