Lula faces internal resistance to Brazil spending cuts as debt climbs

Brazilian President Luiz Inacio Lula da Silva faces internal resistance from his government and Workers Party to tougher spending measures just days after his re-election, complicating efforts to curb rising national debt. Government officials and party leaders have publicly rejected fiscal adjustment discussions, with some arguing spending cuts lost the election and that controls should target Congress budget earmarks and tax breaks instead. The resistance has fueled investor concerns as debt reached 82.9% of GDP, up over 11 percentage points during Lula's presidency. Attention now focuses on who will lead the finance ministry and whether they can overcome internal opposition. The economic team has proposed a modest change targeting the midpoint of the primary balance goal of 0.5% of GDP surplus next year, rather than the lower end of the tolerance band.