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In An Interview, The Secretary Of The Treasury Advocates An Adjustment Agenda And Says That The Path Of The Debt Depends On Lower Interest Rates And Fiscal Discipline.
The Secretary of the Treasury assessed that the Brazilian economy is heading towards a “soft landing,” with a slowdown in activity and inflation converging to targets a scenario that, according to him, opens space to ease monetary policy going forward. At the same time, he reinforced that public debt is only expected to stabilize around 2035, if the country maintains a better primary result and has lower interest rates. The statements were made in an interview published by UOL.
According to the Secretary of the Treasury, the country will need to discuss a new pension reform starting in 2027, in light of the aging population and pressures on the budget.
“It is a pressing topic”, he summarized, while defending that the conversation involves parameters such as contribution time, ages, and special rules.
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Soft Landing With Low Unemployment And Falling Inflation
The Secretary described the current moment as gentle deceleration, with services still sustaining activity and the labor market at a considered healthy level.
For him, “keeping unemployment around 5%–6%” is compatible with inflation expectations approaching the center of the target a rare and positive combination, in the Treasury’s view.
He pointed out that monetary policy has already fulfilled its role of curbing inflation, and that the external environment, with signs of cooling in the U.S. and a loss of momentum in commodities, helps to disinflate.
But he avoided setting dates for interest rate cuts, saying that the Central Bank “will know the moment”. The interview was conducted by UOL.
Rising Debt And Stabilization Only In The Next Decade
When asked about the growth of debt/GDP, the Secretary of the Treasury acknowledged that rising interest rates quickly raised the cost of borrowing more than half of the debt is linked to Selic and that normalization should be gradual.
“When Selic was at 15%, the impact is immediate on the debt; it is temporary, but strong”, he said.
On the fiscal side, he argued that the country has been reversing the decade of deficits and “fighting with zero” in the primary.
To stabilize the debt, he estimated that something in the neighborhood of 1% of GDP in surplus would be sufficient in the medium-term scenario, as long as interest rates decline. The diagnosis and conditions were presented to UOL.
2027 Onward: Pension, Tax Spending, And Spending Rules
The Secretary of the Treasury argued that, after 2026, the country will have to face mandatory expenses and tax expenditures more rigorously.
“It needs to continue improving; it is not enough to just not worsen”, he stated, citing the need for governance over fiscal benefits and re-evaluating spending dynamics that grow beyond feasible limits.
Regarding pensions, he was straightforward: the aging population requires new calibrations. Alternatives include adjusting parameters (age/time) and specific rules; the format will undergo political negotiation.
In parallel, he stated that income policies such as minimum wage must seek balance between social impact and budgetary sustainability, a topic also discussed with UOL.
Fiscal Policy: Contraction In The First Half And Neutrality Now
In the Treasury’s assessment, there is no additional fiscal stimulus pressuring prices at this moment. The Secretary recalled that the first half was “as restrictive as possible” to aid the convergence of inflation, and that, even with some loosening in the second half, the situation remains without net stimuli.
He reinforced that the relief in current inflation and expectations increases the likelihood of less restrictive financial conditions going forward.
“The vectors point to a benign price horizon”, he said, maintaining a cautious tone about the timing of the Central Bank. Excerpts were highlighted by UOL.
Minimum Wage And Indexations: How To Balance Social And Fiscal
When asked about the minimum wage appreciation policy, the Secretary of the Treasury acknowledged the strong social impact reduction of poverty and inequality, but emphasized the need to align real gains with the fiscal framework.
“It is possible to maintain, even with adjustments,” he stated, as long as it is combined with compensatory measures to preserve the debt trajectory.
He noted that the current rule already limits real gains to the spending ceiling (up to 2.5% per year), which moderates pressures on pensions and linked benefits.
The debate will continue in 2027, within the same agenda that will include pensions and expense review. The positions are included in the interview with UOL.
Next Steps: Bimonthly “Without Upsets” And Focused On Execution
On the Bimonthly Revenue And Expenditure Report, the Secretary of the Treasury anticipated no substantial changes compared to the previous framework.
“Message of tranquility”, he summarized, indicating maintenance of the blockage near R$ 10.7 billion and marginal adjustments, as reported to UOL.
For 2025–2026, the plan is to meet the fiscal targets and protect the fall in inflation with coordination between fiscal and monetary policies, preparing the ground for the structural agenda of 2027 pensions, tax expenditures, and spending rule that, in the Treasury’s view, underpins the stabilization of the debt until 2035.
What should come first: new pensions, review of tax benefits, or changes to the minimum? In your opinion, will the drop in interest rates be sufficient to contain the impact on service prices and hold the debt? And what adjustment do you consider politically viable in 2027?
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