Lula’s re-election: Brazil’s public finances are already precarious—is the country on the path to a crash landing?
Without fiscal adjustment, Brazil’s debt could increase by another 10 percentage points over the next four years. But there is no sign Lula will pursue the necessary changes. In the final weeks of the campaign, he promised additional benefits, subsidies, and tax relief that local estimates suggest could cost 0.4-0.6% of GDP in 2027. Some measures can be implemented without new legislation, but their continued financing will require parliamentary agreement.
