Economist José Sergio Gabrielli, who coordinated the government program for President Luiz Inácio Lula da Silva’s re-election campaign, says Brazil’s fiscal situation is “less dramatic” than supporters of austerity suggest. In an article published Monday, he nevertheless argued that the new administration should consider steps to reduce the deficit.
Gabrielli listed ten possible revenue-raising measures, drawing on Lula’s program and proposals from progressive political organizations. Among them are reviewing energy, telecommunications and property contracts nearing renewal, reassessing standardized purchases, and revising tax incentives. He said incentives should have defined time limits, objectives and conditions.
He also called for greater scrutiny of congressional budget amendments, arguing that the funds should align with structural programs, and raised the question of how to finance social security. For 2027, Gabrielli advocated diversifying funding sources and said this should not involve raising the minimum retirement age, reducing indexation or restricting eligibility as a shortcut to fiscal savings.
Gabrielli praised economist André Lara Resende’s proposal to cap interest rates, saying it deserved special attention as a way to coordinate monetary and fiscal policy. He argued that high rates increase debt-servicing costs and that improvements in the debt-to-GDP ratio would not be meaningful if interest rates remained elevated.
The article cited gross public debt at 82.9% of GDP, its highest level since 2021, and the Selic rate at 13.75% a year. Finance Minister Dario Durigan said Sunday that the proposed interest-rate cap was not under consideration by the president.
Gabrielli also said financial-market reaction to Lula’s re-election reflected expectations that Senator Flávio Bolsonaro would win. Separately, PT president Edinho Silva said only Durigan was authorized to speak on economic policy and warned that speculation did not help the country.
Sources: Folha Mercado.