Brazil minister says Lula would reduce deficit gradually over four years

Brazilian Planning Minister Bruno Moretti says President Luiz Inácio Lula da Silva would gradually improve the country’s public finances over four years if re-elected.

The comments come as Lula’s campaign faces an opposing campaign led by Flávio Bolsonaro.

Bolsonaro’s campaign has signalled a plan to cut spending by an amount equal to 1.5% of Brazil’s economic output, though its detailed proposals have not been made public.

Moretti says cuts of about 200 billion reais would not be possible through greater efficiency alone and could require ending programs such as Pé-de-Meia and Farmácia Popular.

He says efficiency measures could save less than 10 billion reais, while Lula’s approach would combine slower growth in required spending with enough revenue.

The government has submitted a budget targeting a primary surplus of 18.6 billion reais next year, compared with an expected effective deficit of 52 billion reais this year.

Moretti says the government’s longer-term plan is to move from a deficit of 0.5% of economic output this year to a surplus of 1.5% in 2030.