Critics Denounce Lula's Fiscal Policy as Brazil Faces Rising Debt and Political Doubts

An editorial published by *Folha de S.Paulo* has harshly criticized the fiscal policies of President Luiz Inácio Lula da Silva's administration, branding them a “frightening failure” amid alarming increases in Brazil's public debt. Projections reveal that Brazil's public debt—covering liabilities from the Union, states, and municipalities—could surge to 86% of GDP by 2027, up from 71.7% in 2022. The International Monetary Fund suggests an even grimmer outlook, estimating that debt might reach 100% of GDP by next year. This escalation surpasses the increase witnessed during Dilma Rousseff's presidency, which saw a 13.7 percentage point rise over five years.

The editorial dismisses comparisons of Brazil's debt to developed nations, emphasizing Brazil's weaker currency and limited credit capacity. It also attributes the current high Selic interest rate of 14.75% not solely to inflation control but significantly to excessive public spending. The piece warns that if fiscal policy remains on its current course without substantial reform, Brazil may face dwindling investor confidence, economic recession, and worsening poverty—echoing the hardships experienced under Rousseff's government.

Complementing this fiscal critique, an opinion article by Paula Sousa accuses Lula’s government of adopting a “politics of amnesia,” where unpopular policies are enacted and then disowned when their consequences emerge. Programs expanding credit have led to rising consumer debt, exacerbating economic strains on Brazilian families. This disconnect between government rhetoric and citizens’ lived experience is increasingly evident, especially in the Northeast region—historically a Lula stronghold—which is showing signs of declining support due to expanded access to information. Sousa highlights that efforts to deflect responsibility by blaming external factors and creating political distractions are losing effectiveness, signaling growing political instability for Lula.

Together, these analyses depict a government grappling with deepening fiscal and political challenges. The dire fiscal outlook and waning public trust suggest that Lula's administration must urgently reconsider its economic strategies or risk prolonged economic malaise and eroding political dominance.