R$ 1.3 trillion: that is the interest bill Brazil pays, in the figure cited by President Luiz Inacio Lula da Silva. The number matters to anyone paying installments, because Brazil's benchmark rate, the Selic, stands at 14% a year, the reference used to price credit, equal to R$ 114 for every R$ 100 borrowed over a year. It was to argue for lower rates that Lula told a campaign rally to stop the "nonsense of running a surplus".
He spoke on Saturday (12) at a campaign rally in Curitiba, in southern Brazil, as he seeks reelection in October's presidential vote. According to G1, Lula said the economy must grow to create jobs and that the government needs to invest for that to happen. In his view, this means giving up the goal of a positive fiscal balance.
"To create jobs, the economy has to grow, and for the economy to grow, the government has to invest. And for the government to invest, we need to stop this nonsense of running a surplus, running a surplus, of fiscal control. Because Brazil's great debt is the interest rate we pay, R$ 1.3 trillion. The rest is investment," Lula said.
What a primary surplus is
Explainer: a primary surplus is the positive result of government accounts, when it collects more than it spends in a year, excluding interest payments on debt. The opposite is a deficit, and official projections point to red ink for the whole of Lula's current term. In deficit years, the public debt grows.
A promise left behind
Saturday's remarks contradict the governing plan the Workers' Party filed with the TSE, Brazil's electoral court, which promises "responsible fiscal policy". They also diverge from what Lula himself said in late August, in an interview with TV Globo: "We will deliver a surplus". At the time, he recalled that the deficit stood at 2.8% when he returned to office, that the latest result was 0.8%, and that it would now turn positive.
Finance Minister Dario Durigan, who has been speaking for the campaign, reiterated in recent weeks that the government would return to surplus from 2027 if Lula wins reelection, according to G1. The budget proposal sent to Congress projects a positive balance of R$ 18.6 billion, after a full term forecast in the red. The goal is to make room for cuts in the Selic, which in real terms is among the world's highest rates.
Public debt reached 82% of GDP in June, the highest level since the pandemic, up more than 10 percentage points in the partial count of Lula's current term, according to G1. Put simply: for every R$ 100 of goods and services Brazil produces in a year, R$ 82 correspond to the accumulated public sector debt. Analysts cited by G1 say the repeated deficits put pressure on rates and indebtedness, and economists note that cutting the Selic by government decision does not guarantee cheaper credit, because long-term rates are set by the market.