What Lula's 2026 Victory Means for Brazil: Markets, Debt, and the Centrão

Andrew, I give you the mic to do your questions.

So go ahead, please.

Okay.

I'd just like to point out that at one level, what's happened over the last five or six days is incredibly dramatic.

a close electoral battle, the loser jumps on a plane and leaves the country.

As I think I was saying earlier, you could write a novel on some sort of plot of this type.

But just to go against that, in some ways it appears as if nothing changes.

From, let's say, is it 8, 12 years, the president has been either called Lula or Bolsonaro.

There's been a lot of talk of reducing the fiscal deficit, and not much has happened.

And there's been a lot of pork barrel and incremental congressional politics that has delivered some reforms.

I think we have to admit that.

But it's not... uh is not a dramatic structural change so my question is um do um my friends here think um a more radical change is in the making in somehow as a result of these elections

well if i could start andrew um I think Brazil now is going through an institutional crisis that has been going on for a while now, mostly because the Congress is gaining a lot of more power and saying in some of the policies and on the government budget.

And we're almost going into a different form of government, changing from a presidential government to something more like a parliamentary structure.

Not quite one because it's, but I understand that as mostly like a transition.

that hasn't been voted by the people in Brazil, and that is being coordinated solely by Congress, which is something very scary and worrisome.

And that has weakened the executive, and the executive has sought some support from the judiciary, from the STF, which is the Supreme Court.

And that translates into a fight amongst the powers, because then Congress thinks that it's going to be attacked by judges or by the Supreme Court, and then you have an infighting going on amongst the powers in Brazil.

And that has been going on, not just in Lula's administration, also in Bolsonaro, including in Bolsonaro's administration, I think that has increased even further because Bolsonaro allowed Congress to have even more powers and having their own individual or specific amendments.

And with their motto of less Brazilian, more Brazil, they decided that the executive or Brazil should have less power, but that translated in practice to a Congress with a lot more control over the budget.

I think that will continue.

I think that in government administration, in Lula's administration, will be even starker now that he doesn't have a majority and the Centro is going to have a lot of power.

They will not allow us Richard mentioned to cut their own amendments.

They will be even trying to increase that or have more power in that.

I think Lula needs Central not to approve things, but actually to protect himself from an impeachment.

Andrew, I give you the mic to do your questions.

So go ahead, please.

Okay.

I'd just like to point out that at one level, what's happened over the last five or six days is incredibly dramatic.

a close electoral battle, the loser jumps on a plane and leaves the country.

As I think I was saying earlier, you could write a novel on some sort of plot of this type.

But just to go against that, in some ways it appears as if nothing changes.

From, let's say, is it 8, 12 years, the president has been either called Lula or Bolsonaro.

There's been a lot of talk of reducing the fiscal deficit, and not much has happened.

And there's been a lot of pork barrel and incremental congressional politics that has delivered some reforms.

I think we have to admit that.

But it's not... uh is not a dramatic structural change so my question is um do um my friends here think um a more radical change is in the making in somehow as a result of these elections

well if i could start andrew um I think Brazil now is going through an institutional crisis that has been going on for a while now, mostly because the Congress is gaining a lot of more power and saying in some of the policies and on the government budget.

And we're almost going into a different form of government, changing from a presidential government to something more like a parliamentary structure.

Not quite one because it's, but I understand that as mostly like a transition.

that hasn't been voted by the people in Brazil, and that is being coordinated solely by Congress, which is something very scary and worrisome.

And that has weakened the executive, and the executive has sought some support from the judiciary, from the STF, which is the Supreme Court.

And that translates into a fight amongst the powers, because then Congress thinks that it's going to be attacked by judges or by the Supreme Court, and then you have an infighting going on amongst the powers in Brazil.

And that has been going on, not just in Lula's administration, also in Bolsonaro, including in Bolsonaro's administration, I think that has increased even further because Bolsonaro allowed Congress to have even more powers and having their own individual or specific amendments.

And with their motto of less Brazilian, more Brazil, they decided that the executive or Brazil should have less power, but that translated in practice to a Congress with a lot more control over the budget.

I think that will continue.

I think that in government administration, in Lula's administration, will be even starker now that he doesn't have a majority and the Centro is going to have a lot of power.

They will not allow us Richard mentioned to cut their own amendments.

They will be even trying to increase that or have more power in that.

I think Lula needs Central not to approve things, but actually to protect himself from an impeachment.