Brazilian presidential hopefuls target microeconomic reform

Overshadowed by Brazil’s fiscal challenges, microeconomic reform remains vital for structural growth and productivity, earning spots—albeit with limited detail—in the platforms of leading presidential candidates.

Campaigns pitch adjustments to tax administration, credit markets, regulation, and public management. Because many measures demand complex negotiations with Congress, state and municipal authorities, and audit courts, execution presents a steep hurdle. Moreover, the next administration must first finalize the implementation of the value-added tax (VAT) reform on consumption, a primary concern for the business community.

Though missing from the reelection platform of President Luiz Inácio Lula da Silva (Workers’ Party, PT), a key priority involves overhauling the Bankruptcy Law and refining judicial reorganization rules, Finance Minister Dario Durigan told Valor.

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In 2024, the administration sent legislation to Congress to expedite liquidation proceedings and expand creditor rights. That bill—once among 25 priority measures—stalled in the Senate. Durigan notes the reform aims to narrow banking spreads, while judicial reorganization tweaks target systemic abuse of debt restructuring protections.

President Lula’s broader platform outlines general ambitions: streamlining the business environment, boosting small business participation in public procurement, and driving exports and innovation. On credit, the administration plans to expand credit guarantee funds for small and medium-sized enterprises (SMEs) while deploying state-backed credit via the Brasil Mais Produtivo program to accelerate digitalization and industrial efficiency.

Flávio Bolsonaro (Liberal Party, PL) centers his platform on deregulation, regulatory review, and public sector digitalization. The candidate proposes reviving the National Privatization Program, though his plan omits specific state-owned enterprise (SOE) targets.

He aims to strengthen the SOE Governance Act, professionalize regulatory agencies, and execute a broad rollback of administrative rules. On credit policy, Flávio–the eldest son of former President Jair Bolsonaro–advocates unwinding subsidized lending programs from the Brazilian Development Bank (BNDES) to encourage private bank competition and lower borrowing costs across the board. His platform also highlights collateral framework reforms, collateralized property rights, and debt recovery mechanisms.

Once a minor contender, author Augusto Cury (Avante Party) proposes establishing an “Entrepreneur’s Bank” capitalized with R$30 billion to R$50 billion. The state-backed lender would extend microloans ranging from R$2,000 to R$20,000 at interest rates of 5% to 6%, though operational details remain sparse.

Ronaldo Caiado (Social Democratic Party, PSD) focuses on legislative and regulatory simplification. However, meaningful microeconomic progress hinges on upfront fiscal consolidation to restrain spending, stabilize the public debt trajectory, and lower benchmark interest rates to foster capital investment, according to Roberto Brant, general coordinator of Caiado’s campaign platform. “Without fiscal discipline, no microeconomic policy can revive growth,” he says.

Brant explains that a Caiado administration would maintain a permanent focus on regulatory relief, workforce development, and partnerships with industrial training networks. “A high-level committee attached to the presidency will certify strategic projects for fast-track environmental licensing while preserving compliance,” he notes.

On financial sector policy, Caiado proposes deepening capital markets, developing long-term private financing instruments, and streamlining administrative licensing.

Renan Santos (Mission Party) draws inspiration from the Center for Public Policy Debates (CDPP) policy lab. His regulatory platform proposes administrative fast-track bodies with 15-day licensing deadlines. He also advocates tax incentives through duty suspensions and dedicated dual-VAT (IBS/CBS) regimes within Special Economic Zones (SEZs).

Romeu Zema (New Party) outlines a radical privatization push, proposing the sale of all federal SOEs to refocus the state strictly on public safety and basic education. On credit, Zema aligns with Flávio in rolling back BNDES subsidized lending, reforming collateral mechanisms, and accelerating credit recovery.

For corporate income tax (IRPJ), Zema plans to transfer calculation responsibilities to the Federal Revenue Service, using automated electronic invoicing to eliminate ancillary reporting burdens for companies.

Microeconomic reform has not ground to a complete halt in recent years—evidenced by the consumption tax overhaul and new sector regulatory frameworks—but progress remains fragmented and slow, according to Insper economist Juliana Inhasz.

Inhasz attributes the sluggish pace to political friction, as the economic payoffs of structural reforms take time to materialize. She identifies the smooth execution of the new consumption tax framework as the immediate priority, alongside regulatory revamps to boost competition and international trade integration. She also underscores public sector digitalization, database integration, and the strengthening of regulatory and antitrust authorities.