Brazil's Finance Minister Dario Durigan said on Monday that the country faces a "painful final mile" of fiscal reforms to address high interest rates, rising public debt and household leverage hovering around record levels.
"We have to deal with it. This needs to be addressed quite quickly so that we can return to having a development project, a country project," he said at an event hosted by Santander Brasil in Sao Paulo.
Durigan pointed to a series of issues that need to be tackled, including curbing mandatory spending and revisiting the size of congressional earmarks, the budget allocations individual lawmakers direct to projects in their districts. He also called for addressing privileges within the pension system, particularly for military personnel, and reining in above-cap salaries in the public sector.
"Do we need to do it? We do. Let's bring it into the light of day," he said.
The lack of what investors see as a credible path to stabilizing Brazil's public debt, amid rapid growth in government spending, has forced the country to pay hefty risk premiums to finance itself.
Since leftist President Luiz Inacio Lula da Silva, who is seeking reelection in October, took office in 2023, Brazil's gross public debt as a share of gross domestic product has risen by more than 10 percentage points.
With the exception of the goal to reduce congressional earmarks, Lula's government platform for the coming years does not detail fiscal adjustment measures aimed at curbing mandatory spending, nor does it outline steps to address privileges in the pension system or the public sector.
