VP gives first spoilers of Brazil’s new fiscal anchor

Markets are eagerly awaiting the Brazilian government’s proposal for a new fiscal anchor to replace its current spending cap, which has been in place since 2016 but was rendered ineffective by the previous administration’s budgetary maneuvers. 

The government has kept its cards close to its chest to shield the proposal from criticism before all the details are ironed out. Finance Minister Fernando Haddad on Monday called recent leaks about the issue “inappropriate.” But, just minutes after Mr. Haddad’s words, Vice President Geraldo Alckmin gave the markets a spoiler.

According to Mr. Alckmin — who was speaking at an event organized by the National Development Bank (BNDES) — the new anchor should be based on a tripod consisting of keeping the debt curve under control, ensuring primary surpluses, and controlling public spending. But Mr. Alckmin went into no further detail, other than to say the proposal had been “well conceived.”

A moderate conservative throughout his career, Mr. Alckmin was seen by financial markets as a sort of guarantee that the current government — elected under a broad coalition — would not veer too far to the left. 

President Luiz Inácio Lula da Silva first saw the fiscal anchor plan on March 17, and now Mr. Haddad has begun building bridges with congressional leaders to facilitate things for when it comes time to whip votes. The federal spending cap was written into the Constitution, meaning that only a full amendment can repeal and replace it.

The stakes are incredibly high, as the government faces a crisis of...