BRASILIA, Aug 26 (Reuters) - Brazilian Senator Flavio Bolsonaro would introduce a ceiling on public debt if elected president later this year, triggering spending restraints if a predetermined threshold is exceeded, a senior campaign adviser said on Wednesday.
"We will approve a ceiling for public debt. If debt is too high, a spending cap is triggered, putting the fiscal trajectory on a sustainable path," Adolfo Sachsida, a lawyer and economist who joined Bolsonaro's economic team last week, said
in a video on X.
Bolsonaro, the eldest son of former President Jair Bolsonaro, is the leading challenger to leftist President Luiz Inacio Lula da Silva in the October 4 election. If no candidate wins a majority, a second round will be held on October 25.
Sachsida served as the mining and energy minister and economic policy secretary during Jair Bolsonaro's term as president.
Senator Bolsonaro's campaign did not immediately respond to requests for comment on the proposal or on the debt threshold that would activate the mechanism.
Reuters reported earlier this month that the senator's campaign was preparing a new fiscal framework that would impose stricter spending constraints as debt rises, potentially reducing real spending growth to zero.
Brazil's gross public debt, the government's main measure of fiscal solvency, currently stands at 81.9% of gross domestic product, up more than 10 percentage points since Lula began his most recent term as president in 2023.
In a post on the Substack platform before joining the campaign, Sachsida advocated a constitutional amendment under which a spending cap "similar to the one adopted in Brazil in the recent past" would automatically take effect whenever gross public debt exceeded 65% of GDP, effectively preventing real growth in public spending.
Brazil's debt ratio was last below that level in November 2015. In 2016, former President Michel Temer approved a constitutional spending cap limiting federal expenditure growth to the previous year's inflation rate.
The rule remained in place until it was replaced by Lula's fiscal framework in 2023, although it had been substantially weakened over time through a series of exceptions.
The current rules combine primary balance targets with limits allowing real expenditure growth of between 0.6% and 2.5% per year, although officials have recently floated reducing the upper limit to 1.5%.
(Reporting by Marcela Ayres; Editing by Paul Simao)
