Brazil's Finance Minister Durigan blames high rates on external factors, pledges fiscal adjustment

Finance Minister Dario Durigan said Brazil’s main economic bottleneck is the elevated Selic rate, currently 14.25% per year. He argued the Ministry of Finance is "the least guilty" for the high interest rates, stating, "Eu não estou procurando culpados... quem é menos culpado é o Ministério da Fazenda por conta da taxa de juros."

Durigan called for a tighter alignment between fiscal policy and the Central Bank’s monetary stance, stressing that the fiscal debate alone cannot lower the rate. He confirmed the government will pursue a fiscal adjustment, targeting a primary surplus of 0.5% of GDP in 2027 and increasing it to 1.5% by 2030. The plan includes cutting tax exemptions worth over R$ 600 billion a year, raising taxes on higher incomes and wealth, and containing mandatory spending growth.

He warned that public debt, close to 80% of GDP, is pressured by the high Selic, which raises the cost of servicing the debt and hampers private investment. Durigan reaffirmed that Brazil’s fiscal framework, established in 2023, remains sustainable and will be maintained while the adjustment proceeds.