Brazil's Economic Hurdles for President Lula's New Term

Brazil's re-elected President Luiz Inacio Lula da Silva faces five major economic challenges in his fourth term starting January, including soaring public debt, high interest rates, household debt, political obstacles, and tax reform uncertainties. Brazil's public debt has risen to over 82% of GDP, leaving under 8% of the federal budget adjustable, while inflation at 4.6% exceeds the central bank's target range despite interest rates at 13.75%. A record 84 million Brazilians and 9.3 million businesses are behind on debt payments. Lula will confront a conservative Congress after the Liberal Party and allies secured control of both chambers, complicating his reform agenda. The government has also delayed disclosing the effective rate of a new value-added tax, estimated near 28%, and postponed a bill regulating taxes on harmful products.