What any next political cycle needs to deliver to unlock investment in Brazil

Regardless of the election outcome, Brazil enters its next political cycle in an unusually strong position by recent standards. The current account deficit sits below the volume of foreign direct investment entering the country, international reserves total more than $370 billion, inflation is heading toward a range of 4% to 4.5%, and unemployment sits near historic lows. It is a combination of fundamentals the country has not had in at least three decades.

One piece is still missing, and it weighs more than all the others combined: the trajectory of public debt, which continues growing faster than the economy itself. Until that issue is credibly addressed, the cost of money in Brazil remains structurally higher than the macroeconomic fundamentals would justify, and the Selic rate stays far from the levels practiced by other emerging economies with similar fundamentals.

Looking at this combination, we reach a direct conclusion: fiscal adjustment isn’t a political banner, it is a technical condition for Brazil to stop operating with double digit interest rates. If that piece is addressed consistently over the next cycle, there is real room for a single digit Selic rate, something that would structurally change the cost of credit for companies of every size, the appeal of equities relative to fixed income, and the calculation behind any business currently held back by expensive credit.

This kind of transformation doesn’t depend on which party governs, it depends on continuity and regulatory predictability after the election. For companies and investors, the practical lesson isn’t to bet on a specific electoral outcome, it is to closely track the concrete signs of fiscal adjustment that emerge starting in 2027, because those signs, not the ballot result, will determine whether the next cycle delivers civilized interest rates or repeats the same pattern.