Brazil's Lula government to mandate fiscal target center after market backlash

Brazil's Finance Minister Dario Durigan announced plans to legally mandate the government to target the center of its fiscal goal, following negative market reactions to President Luiz Inácio Lula da Silva's re-election. The proposal, which may require constitutional changes, comes after the government repeatedly used the goal's lower tolerance limit as its effective target, undermining the credibility of its fiscal framework. Critics note Lula previously dismissed budget surpluses as "nonsense." The government has also excluded billions in exceptional spending from fiscal rules, while debt has risen over ten percentage points of GDP. Analysts urge spending cuts and a return to primary surpluses to enable lower interest rates and sustainable economic growth.