Brazil's gross public debt has passed R$ 10 trillion and now equals 82% of GDP, almost everything the country produces in a full year. President Luiz Inácio Lula da Silva said on Thursday (27) that the figure does not worry him and that growth is his plan to shrink it. The size of the debt matters to ordinary Brazilians because the government pays steep interest on it, a cost that competes with health and education in the federal budget.
In an interview with TV Globo, the fourth in a series with presidential candidates, Lula was asked what debt level he would target in a possible new term. He gave no target and compared Brazil to more indebted nations. "80% debt in a country is not much. Look at the United States, Japan, Italy. Do you know what the US debt is? 120% of GDP", he said, according to G1.
Understand: what debt-to-GDP means
GDP is the sum of all goods and services a country produces in a year. Saying the debt equals 82% of GDP is like a household owing 82% of everything it earns in twelve months. If income grows faster than the debt, the burden falls, and that is Lula's bet when he talks about growth.
The president blamed the 10 percentage point rise in the debt during his government on the 14% a year interest rate and on a 2.8% deficit he says he inherited from Jair Bolsonaro. In practice, a 14% rate turns every R$ 100 owed into R$ 114 after one year, before anything is repaid. According to InfoMoney, Lula also recalled the primary surpluses of his first two terms and said: "If there is one thing that guides my life, it is called fiscal responsibility".
A primary surplus is when the government collects more than it spends, before interest payments. The 2027 budget is being drafted with a surplus target of 0.2% of GDP, and Finance Minister Dario Durigan defends curbing mandatory spending. Pressed on which expenses he would cut, Lula made no specific commitment, while economists cited by InfoMoney say stabilizing the debt will require lasting improvement in the primary result.
Correios: a R$ 15 billion hole and a veto on privatization
In the same interview, Lula ruled out privatizing Correios, the state-owned postal service that reaches every Brazilian municipality and has posted four straight years of losses, with a record hole of R$ 15 billion. "I do not consider selling Correios, I do not. I want to recover Correios", he said, adding that since 1985 the company has been in crisis and someone has always proposed privatizing it.
Lula admitted the company "did not adapt to a new time" as private delivery firms advanced, and said its new management will carry out "whatever downsizing is necessary". He raised the possibility of partnerships with Brazilian or foreign companies to improve services. The first round of the election, in which Lula seeks a fourth term, takes place on October 4.