Brazil's Independent Fiscal Institution (IFI) has calculated that three campaign promises—adjustments to Bolsa Família, the end of online betting revenues, and support packages for individual microentrepreneurs (MEIs)—could punch a hole of up to R$ 40 billion in public accounts. The market is already showing its discomfort: the U.S. dollar is climbing, futures interest rates are rising, and the Ibovespa is falling.
What Did the IFI Say About Lula's Campaign Promises?
In its Fiscal Monitoring Report released this Thursday (29), the IFI—an agency tied to the Brazilian Senate—tallied three fronts: the Bolsa Família adjustment, tax revenue losses from ending online betting, and the MEI microentrepreneur package. None of the three are accounted for in the federal budget. The institution views these measures as piling onto an already challenging scenario that demanded actions to curb public debt growth, which is why the report highlights the need for fiscal adjustment in the upcoming term.
These figures have clear boundaries:
- Included in the estimate: Bolsa Família adjustments, tax revenue losses from ending online betting, and the MEI package.
- Excluded from the estimate: The Pé-de-Meia savings program for higher education students and free weekend public transit, which were also mentioned during the campaign.
In other words, the figure represents a partial baseline of what these promises could cost. At the same time, the IFI notes that the actual impact depends on implementation and design: campaign promises do not automatically translate into spending. Moreover, this is not a one-sided issue. According to the report, both presidential campaigns presented proposals in the second runoff that would increase spending or reduce revenue, such as incentives for MEIs, expanded social benefits, and debt renegotiation programs. The tension between campaign promises and the federal budget was already covered in our coverage of the presidential debate and its effects on the B3.
“If we were in a scenario of abundant resources and budgetary headroom, there would be no problem.”IFI Fiscal Monitoring Report, released on 10/29
That quote captures the core reasoning: the issue is not the program itself, but the cash flow. This leads to the next question: how heavily does this figure actually weigh?
How Heavy Is This Burden, and What Would Change Without the Promises?
The sources we accessed do not compare this figure to GDP, the fiscal target, or the annual deficit, nor do they specify how much each measure contributes individually. We will not invent these proportions. What can be stated with certainty is the simple math: without these three measures, the imbalance would be smaller by that exact amount, and the fiscal adjustment requested by the IFI would match the previous baseline rather than the scenario loaded with new promises.
Nor does the report anticipate a sharp pivot. Following Lula's re-election, the IFI does not forecast abrupt changes in economic policy management; on the fiscal front, the expectation is that a gradual adjustment strategy will prevail. It is the combination that worries markets: a growing tab paired with a slow-moving adjustment. Investors lending to the government in either reais or U.S. dollars are beginning to demand higher returns to shoulder this risk.
Why Did the U.S. Dollar Rise and the Stock Market Fall?
The U.S. dollar rose to R$ 5.42 (+1.36%) on Thursday following the IFI's warning. To put this jump into perspective, simply look at the previous day's close:
This dynamic was already underway before the report. According to InfoMoney, the Ibovespa dropped 2.68% on Wednesday (28) to 171,006.10 points—marking its third consecutive decline following the elections—while futures interest rates (DIs) climbed across the entire curve. Foreign investors pulled R$ 2.8 billion from the stock exchange the day after the runoff, a trend that reports indicate has not yet stopped. Meanwhile, the re-elected administration has prioritized legislative emergencies, which analysts view as a focus on governance rather than fiscal signaling.
Lucas Xavier, head of the equities desk and a partner at AW Capital, highlighted this vacuum in the same report: no positive scenarios regarding the fiscal situation have been presented so far, and the market is beginning to question whether further interest rate cuts will happen at all—a possibility he describes as increasingly remote. The logic is sequential: unbacked spending requires more debt, more debt demands higher interest rates, and higher interest rates drive investors away from equities. The external backdrop offered no relief either: the Federal Reserve maintained interest rates between 3.75% and 4.00%, Wall Street finished in positive territory, and oil prices moved back above $100 per barrel without easing domestic risk aversion. To track foreign exchange movements throughout the day, you can check our live dollar quote and fair value page.
VALE3 and Petrobras: What to Watch in Equities Today?
InfoMoney notes that the mini-index futures contract (WINZ26) closed yesterday down 2.84% at 173,300 points, and that traders are focusing today on Brazil's GDP preview, U.S. PCE inflation data, and the federal government's fiscal results. Two stocks dominate the contract: VALE3, which releases its earnings report after today's market close, and Petrobras (PETR3 and PETR4). Their performance will signal whether selling pressure continues or if the market finds room to stabilize.
For Vale, the earnings report arrives on the same day the exchange rate shifts; we previously analyzed these two variables together in our review of the IFI's fiscal warning and Vale's earnings. For Petrobras, the dollar and fuel prices have remained central to the discussion, as we showed in our analysis of the pressures weighing on PETR4.
Nothing requires you to sell today: the IFI estimated a risk rather than announcing approved spending. However, the report reinforces what the market is already pricing in—a higher risk premium for Brazilian assets. Equity investors should expect continued volatility until there is concrete fiscal signaling. Investors holding fixed-income bonds with fixed rates or inflation-linked yields may see mark-to-market valuations fluctuate alongside futures interest rates, making it wise to review bond maturities before making any moves.
What to Watch Moving Forward?
Government fiscal signaling — market participants note that no positive scenarios have been delivered; any concrete adjustment measure would shift sentiment.
The U.S. dollar — moving from R$ 5.340 at yesterday's close to R$ 5.42 today, showing how much the warning has been absorbed.
Foreign capital flows — the R$ 2.8 billion outflow serves as a key barometer; if it persists, pressure on local equities will too.
The Ibovespa — closed at 171,006.10 points after three straight drops; the question is whether a fourth decline follows today.
Vale's earnings and U.S. data — earnings drop after the bell, while the U.S. GDP preview and PCE inflation data set the pace abroad.
To sum up what the IFI reported: three campaign promises carrying up to R$ 40 billion in additional fiscal imbalances, none of which are budgeted, alongside a recommendation for the next administration to implement fiscal adjustments. Both the stock market and the foreign exchange market are already demanding a response from the government.
