Haddad unveils first plan to curb Brazil’s public deficit

Under the inquisitive eye of fiscal experts and financial markets on Thursday, Finance Minister Fernando Haddad announced his first plan to reduce the public deficit since taking office. The measures seek to address the fiscal imbalance that, in his words, was mostly caused by former President Jair Bolsonaro’s electoral impetus in the second half of last year. 

The plan includes a new debt refinancing program, efforts to reduce federal expenses, and the fine-tuning of mechanisms capable of stemming revenue losses. 

In a statement to journalists, Mr. Haddad said that the changes projected by his team could bring the country’s accounts into the black as early as this year — an extremely optimistic opinion not entirely shared by the market.

The finance minister says there is a chance the country could go from having a deficit of BRL 231 billion (USD 44 million) to a surplus of BRL 11.13 billion in 2023. In a more realistic outcome, however, the public deficit would go from 2.6 percent of GDP to between 0.5 and 1 percent.

“If you add up the target of each action, it wipes out the deficit. But we know that the goal of each action will not be reached,” said Mr. Haddad. He mentioned that the Central Bank’s monetary policy may affect revenues but stressed that the government will not try to interfere with the authority’s autonomy.

The measures were eagerly awaited by the financial market, which had caveats to its support for President Luiz Inácio Lula da Silva’s candidacy last year. Mr. Haddad is seen as the natural successor in the coming years. He...