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Brazil Will Have to Boost Spending in 2023, Lula’s Adviser Says

  • Current spending cap rule is unfeasible: Nelson Barbosa
  • Bigger cash transfers to the poor would be temporarily needed
People stand in line to receive food outside the Biblioteca Parque Estadual in downtown Rio de Janeiro, as the Covid-19 pandemic increases poverty in Brazil.

People stand in line to receive food outside the Biblioteca Parque Estadual in downtown Rio de Janeiro, as the Covid-19 pandemic increases poverty in Brazil.

Photographer: Dado Galdieri/Bloomberg
Updated on

Brazil’s next president will have to temporarily increase public spending to fight poverty and unemployment, according to a close economic adviser to Luiz Inacio Lula da Silva, who leads opinion polls ahead of the October vote.

Nelson Barbosa, a former finance minister during the administration of Dilma Rousseff, a Lula ally, said financial markets have already realized that the current rule limiting the growth of public expenditures to the inflation rate “is unfeasible.” The so-called spending cap was created without effective mechanisms that would allow the government to comply with it, and needs to be replaced as part of a wider overhaul of Brazil’s budget laws, he said.