Brazil's Lula Government Split Over Size of Fiscal Adjustment

Brazilian President Luiz Inácio Lula da Silva's government is facing an internal impasse over the extent of fiscal adjustment measures following his re-election, as he resists proposals that could be seen as betraying campaign promises. The Finance and Planning ministries are preparing a range of options, from targeted tweaks to structural reforms. While pursuing the center of the fiscal target is a consensus, officials disagree on the scope of other measures, with Lula reportedly ruling out changes to the minimum wage or social program benefits. The government must find at least R$20 billion to fund campaign pledges like Bolsa Família increases and a R$5,000 Pix payment for micro-entrepreneurs. Market pressure for a strong signal has grown after stocks fell and the dollar and interest rates surged post-election, though some officials argue any announcement should wait until Lula names his new Finance Minister.