Professor Pedro Paulo Zahluth Bastos from the Institute of Economics at Unicamp stated toBrazil's Agency (Agência Brasil)that substantial cuts, such as the R$ 200 billion discussed during the presidential campaign, tend to impact social areas.
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"Around 90% of federal primary spending is mandatory: Social Security, BPC [Benefit of Continuous Provision], personnel, health and education floors, Bolsa Família. What remains, discretionary expenses, totals little over R$ 200 billion," he said.
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Bastos adds that, within the discretionary expenses, which are those that can be freely used by the government, are investments, in addition to the funding for universities, federal hospitals, and the Federal Police (PF).
"A R$ 200 billion cut that preserves social benefits zeroes out the rest. If it doesn't zero out, it enters into the benefits. There is no third option," the economist concluded.
Economics professor Maria Lourdes Mollo from the University of Brasília (UnB) explained that it is not possible to make substantial cuts to the public budget without affecting the social area.
"Not only due to the specific social policies, which will be compromised, but because public spending has a multiplier effect on income and employment that is lost," she said.
The professor argues that public expenses contribute to stimulating the economy and that, with the high interest rates practiced in Brazil, spending cuts tend to cause contraction in the economy as a whole.
"Moreover, as collection falls with the product, what will be allocated to education and health, which is a proportion of the revenue, also falls," she added.
After advocating for a "big scissors"inspired by the government of Javier MileiDespite cuts in areas such as health, education, and food in Argentina, candidate Flávio Bolsonaro has maintained that he does not intend to reduce social programs and benefits if elected.
In Lula's team, the message is that fiscal adjustment will be necessary for a potential fourth term, but it would be gradual and over the four years.
In an exclusive interview with Folha de São Paulo, Planning Minister Bruno Moretti projects moving from a public accounts deficit of 0.5% of GDP this year to a surplus of 1.5% in 2030.
"We are talking about slowing mandatory expenses, reconciling people's rights with the process of keeping public accounts in order," Moretti said.
1.5% of GDP cut
In August of this year, in an interview with Globo News, Flávio Bolsonaro's economic team coordinator, Daniella Marques, stated the plan includes changes in fiscal rules to control public debt, which involves a 1.5% adjustment of the Gross Domestic Product, approximately R$ 190 billion, based on 2025's GDP.
Candidate Luiz Inácio Lula da Silva points out that Flávio's "big cut" will harm INSS retirees and pensioners and beneficiaries of social programs, a claim denied by the Fluminense senator.
"I will not make savings on those who need it most, the poorest people in Brazil," the PL's presidential candidate emphasized.
Super-salaries and waste
In recent days, Flávio's campaign has argued that the cuts would be limited to the alleged privileges of public servants.As with supersalary benefits, among other expenses in the public sector. He also advocates increasing actions to combat fraud.
Professor Pedro Paulo emphasizes that these expenses amount to several billion, not hundreds of billions.
"Super-salaries and benefits above the ceiling are a matter of justice, not budget. Eliminating ten ministries saves the administrative cost, which is small; the money is in the programs the ministries execute," he commented.
According to the expert, fighting fraud in the INSS (Brazilian Social Insurance Institute) can free up resources once, but not every year. "No government has cut R$ 200 billion in waste. Those who cut, cut from the population," he completed.
According to the economist from Unicamp, the only way to reach cuts of 1.5% to 2% of GDP is through cuts in mandatory expenses or changes in the calculations of the current benefit adjustments.
"No one loses the benefits of today, they lose the adjustment of tomorrow. The retiree who earns a minimum wage will no longer have the real gain they have had every year since 2023. In ten years, this is a pension reform done without voting on a pension reform," he pointed out.
Interest rates put pressure on debt.
The reduction of public spending is one of the main demands from the financial market for governments and candidates, arguing that expenses put pressure on public debt and would jeopardize the sustainability of Brazil's state accounts.
Professor Pedro Paulo Bastos of Unicamp emphasizes thatThe main factor pressing the public deficit is the interest rates.The text: "which have been consuming around R$ 1 trillion per year. Brazil reached, in September, the highest real interest rates in the world, according to the "Consultancy Moneyou.
"The public sector has a deficit of 0.6% of GDP. Interest costs 8.9% of GDP. Cutting 1.5% of GDP from those who receive pensions and Bolsa Família, while paying 8.9% of GDP to those who hold public debt, is not an adjustment. It's a choice by those who pay," he commented.
Fiscal Framework
Even at the beginning of the current Lula government, the New Fiscal Framework was approved, which limited expenditure growth in relation to GDP according to revenue growth.
The candidate for re-election has promised to maintain this framework, which, according to Lula's government plan, "controlled expenditure growth without harming social policies and allowed a significant reduction in the primary deficit."
The PT candidate has argued that the fiscal result will come from the "restart of economic growth, control of the increase in primary spending, investing in improving the efficiency and quality of public spending."
Flávio's campaign has advocated for changes to the current fiscal framework focused on "stabilization and reduction of public debt" to deliver primary surpluses and limit subsidized credit.
"The goal is to achieve, in the shortest possible time, stability and then a decrease in the Debt/GDP ratio," says the official document from the PL campaign.