Brazil's opposition presidential candidate Flávio Bolsonaro's campaign has proposed a constitutional amendment to cap public debt at 65% of GDP, with automatic spending restrictions if the threshold is exceeded. The plan, announced by economist Adolfo Sachsida, aims to curb the fiscal trajectory amid rising debt levels.
The proposal would trigger a spending cap that halts real growth in public expenditures if debt surpasses 65% of GDP. Current gross public sector debt stands at 81.9% of GDP, up more than 10 percentage points since President Luiz Inácio Lula da Silva took office in 2023. The campaign's fiscal framework would impose stricter restrictions as debt levels rise, potentially reducing real expenditure growth to zero.
Sachsida, who joined Flávio Bolsonaro's economic team, outlined the plan in a video posted on X. The proposal contrasts with the current fiscal framework, which allows real federal expenditure growth between 0.6% and 2.5% annually. Authorities have recently discussed reducing the upper limit to 1.5%.
The campaign's debt cap concept mirrors the 2016 constitutional spending cap introduced under former President Michel Temer, which limited federal spending growth to inflation. That cap remained in effect until replaced by Lula's fiscal framework in 2023. Brazil's debt-to-GDP ratio last fell below 65% in November 2015.
The announcement comes ahead of Brazil's presidential election, with the first round scheduled for October 4 and a potential runoff on October 25.
