Kathmandu— Senator Flavio Bolsonaro, the son of former President Jair Bolsonaro and a leading challenger in Brazil’s upcoming presidential election, has announced plans to institute a debt ceiling should he win office this October. The proposal, outlined by economic advisor Adolfo Sachsida, would trigger automatic spending cuts if public debt reaches a predetermined level, with the goal of improving Brazil's fiscal reputation and ensuring sustainable spending. Bolsonaro currently trails incumbent Luiz Inacio Lula da Silva in polls, but remains a strong contender in what is expected to be a closely contested race.

Fiscal Policy as a Campaign Focus

Adolfo Sachsida explained the proposal in a recent social media post, stating that the debt ceiling would place Brazil’s fiscal trajectory “on a sustainable path.” Sachsida, who was recently added to Bolsonaro's economic team, suggested the measure could mirror past policies, triggering cuts when gross public debt exceeds 65 percent of GDP. Currently, Brazil’s public debt stands at approximately 82 percent of its GDP—an increase of over 10 percent since Lula assumed office in 2023.

Spending Caps and Social Programs

The proposed debt ceiling aligns with conservative efforts to promote fiscal restraint, potentially leading to reductions in government social programs. In 2016, a constitutional amendment under President Michel Temer implemented a spending cap limiting federal increases to the previous year’s inflation rate. This rule was later weakened and replaced by Lula's current framework which allows for controlled expenditure growth. Lula has prioritized poverty reduction through investment in social welfare initiatives during his term.

Economic Context and Challenges

The economy is a central issue in the election, with Bolsonaro’s campaign warning that another Lula victory could lead to recession despite recent improvements in inflation and unemployment rates. Interest rates remain relatively high, drawing criticism of Lula's economic platform from the right wing. The race also takes place amid concerns about potential external interference, specifically from former U.S. President Donald Trump, who is known to be close to the Bolsonaro family and has previously used tariffs as leverage in Latin American politics.

With polls indicating a tight race between Lula and Bolsonaro, the proposed debt ceiling represents a key policy distinction that could sway voters concerned about Brazil’s fiscal health and economic future.

(With inputs from Al Jazeera)

Originally published on abcnews.com.np.