Lula Faces 5 Economic Tests in Fourth Term as Brazil Debt Tops 82% of GDP
Updated
Updated · Reuters · Oct 26
Lula Faces 5 Economic Tests in Fourth Term as Brazil Debt Tops 82% of GDP
3 articles · Updated · Reuters · Oct 26
Summary
Brazil enters Lula’s fourth term in January with five major economic strains, led by public debt above 82% of GDP after rising more than 10 percentage points during his current term.
13.75% interest rates have not brought inflation fully to heel: annual inflation is 4.6%, above the central bank’s tolerance band, and markets see it missing the 3% target until as late as 2029.
Nearly 84 million Brazilians and 9.3 million businesses are behind on debt payments, pressuring Lula to revive debt-relief plans that analysts say would offer only temporary relief.
Congress could make fixes harder: Brazil’s most conservative legislature since the 1980s is set to be controlled by Bolsonaro allies, limiting Lula’s room for tax and spending measures.
Tax policy still adds uncertainty, with a new VAT due in January but its effective rate undisclosed; independent analysts estimate about 28%.