80% of GDP. That is where Brazil's gross public debt already stands, according to Folha, and President Luiz Inácio Lula da Silva said on Sunday (27) that the figure causes no panic. For taxpayers, every extra point of debt means more of the federal budget going to interest payments and less left for health care, education and public works.

In an interview aired on Sunday, the president pointed to the country's international reserves, worth US$ 370 billion, as a cushion against the rising debt. He credited a decision from 2005, in his first term, for building the stock, and called it a "support cushion for the Brazilian economy", in the account of the newspaper Correio do Povo. Folha reported the conversation as an interview with BandNews radio; Correio do Povo described it as recorded for Canal Livre, the Sunday interview program of Band, one of Brazil's largest broadcasters.

Lula acknowledged that the rising debt worries him, because "it is not good to owe more than one earns", and promised to bring the ratio down relative to GDP. He did not detail how he plans to get there. In Folha's transcript, the president listed the spending he sees as indispensable:

"How are we going to cut this public debt? First, by knowing which spending is necessary. We will keep helping the poorest, we will keep raising the minimum wage above inflation, we will keep adjusting the things that must be adjusted."

In plain terms: gross debt as a share of GDP compares what the government owes with everything the country produces in a year. It is like a family earning 5,000 reais a month, or 60,000 reais a year, that owes 48,000 reais, equal to 80% of a year's income. International reserves are the country's dollar savings, an emergency fund against crises.

The government's own numbers

According to Folha, the government itself revised its projections and now sees debt near 90% of GDP in 2029, or above that if public accounts land at the floor of the fiscal target in the coming years. Lula's current term is set to end with debt 12 percentage points higher than he found when he took office in 2023, closing the year at 83.7% of GDP. In everyday terms, the country owes 12 more reais for every 100 reais of wealth it produces than it did at the start of the term.

The pace of federal spending draws criticism from financial markets and the opposition because of the risk that it keeps pushing debt up. Finance Minister Dario Durigan and Budget Minister Bruno Moretti have said the government intends to seek an effective surplus starting next year. Lula, for his part, also bet on falling interest rates as a condition for economic growth, according to Correio do Povo.

The messages inside the government diverge. To business leaders, Lula promises fiscal responsibility in a new term; a wing of his Workers' Party (PT) wants to expand investment. The interview came in the final stretch of the campaign, with the president running for re-election.