Bolsonaro camp drafts debt-linked spending rule to replace Brazil fiscal framework
Bolsonaro's campaign is drafting a debt-linked fiscal rule that could freeze real federal spending growth, replacing Lula's current framework.
The presidential campaign of Senator Flavio Bolsonaro is preparing a new fiscal framework to replace Brazil's current budget rules, according to two sources familiar with the matter. The proposed rule would tie spending growth to public debt levels, potentially reducing real spending growth to zero.
Under the draft proposal, spending growth would remain below revenue growth, with the cap tightening as the debt burden increases. One source said the rule could freeze federal spending in real terms whenever gross government debt exceeds 80% of GDP — a threshold already breached, as debt reached 81.9% of GDP in June.
The framework would also limit spending growth to 50% of revenue growth when debt is between 75% and 80% of GDP, and 70% when debt falls below 75%. The plan could be sent to Congress as a constitutional amendment during a potential government transition.
Bolsonaro's team is also preparing spending cuts and a review of tax breaks aimed at delivering a fiscal adjustment equivalent to 1.5% of GDP. The campaign said its government platform would be released by August 15 and would focus on fiscal discipline, public-sector efficiency, and conditions for stronger economic growth.