Jun 16 2026 | Nº 11

The Beginning of the Programmatic Dispute

By Paulo Abrão
Executive Director of the Washington Brazil Office

The coming months will be decisive for Brazil’s 2026 elections. The window for building electoral coalitions is narrowing, a dynamic that is likely to increase electoral tensions. The fallout from the scandal involving Senator Flávio Bolsonaro and Banco Master, combined with developments over the past week, suggests the beginning of a transition toward a contest increasingly centered on government programs, economic management, and governing capacity.

Recent polls indicate a consolidation of President Luiz Inácio Lula da Silva’s electoral recovery. His expanding lead over Flávio Bolsonaro comes at a moment when the opposition’s leading candidate is still attempting to absorb the political damage caused by allegations surrounding his campaign. At the same time, a growing share of voters expresses dissatisfaction with both major political camps, revealing some potential space for alternative candidacies, although none has yet managed to translate that sentiment into meaningful electoral competitiveness.

The opposition’s strategy also appears to be evolving. Flávio Bolsonaro has begun presenting a more detailed set of policy guidelines for a potential administration, emphasizing fiscal adjustment, a smaller state, revisions to the tax reform approved under Lula, tougher public security policies, and changes to social welfare programs. This move suggests an effort to shift the debate toward policy proposals and away from the identity-based themes and emotional mobilization that have characterized Bolsonaroism in recent years. However, the senator faces resistance from more radical factions within his own political camp.

Meanwhile, the economy is once again moving to the center of the political debate. Recent congressional decisions approving high-cost fiscal measures aimed at well-organized social constituencies demonstrate how electoral competition is already shaping legislative behavior. Government and opposition forces are competing to define the narrative around fiscal responsibility, economic growth, and social protection at a time when inflation, interest rates, and purchasing power remain among voters’ foremost concerns. President Lula is signaling continuity in his economic agenda, while Flávio Bolsonaro has begun floating the possibility of appointing prominent figures from the financial sector to lead the Finance Ministry should he win the presidency. The move echoes Jair Bolsonaro’s 2018 strategy of signaling in advance the economic team that would guide his administration.

Business sectors increasingly view the election as a potential choice between greater institutional stability, associated with Lula’s administration, and a more market-oriented economic project represented by Flávio Bolsonaro. Corporate leaders are beginning to assess which scenario offers the most favorable conditions for investment, regulatory predictability, and long-term growth.

The digital battlefield is also changing. Monitoring of social media conversations shows a highly polarized environment, but one in which the organic mobilization capacity of both political camps appears to be weakening. Political discussions remain concentrated among already engaged actors, while issues such as the economy, public security, Congress, Banco Master, and international affairs are gaining prominence. Polarization remains a defining feature of the political landscape, but it may no longer be sufficient on its own to determine the election outcome.

The transition from a contest centered on political identities to one increasingly focused on policy visions and governing capacity cannot yet be considered definitive. The coming weeks will be crucial in determining whether this trend is consolidated or whether new political developments will once again make polarization the dominant axis of Brazil’s presidential race.

QUICK CATCH-UP

Senate approves ‘fiscal bombs’

The Senate last week armed three "fiscal bombs" — measures forcing the government to spend more.

The headline item renegotiated debt for large rural producers, which the Finance Ministry costs at BRL 140 billion (USD 27b) over a decade. Two committee votes added similar checks: eased retirement rules for community health agents (BRL 30 billion) and a near-quadrupling of doctors' and dentists' minimum salary (BRL 47 billion).

From left to right, lawmakers are pricing their own re-election. A costly favor to a well-organized constituency — farmers, physicians, health workers — is cheap insurance for votes. Government allies declined to fight, judging the risk of obstruction in an election year to be riskier than the bills themselves.

Senate President Davi Alcolumbre, eyeing another term, scheduled the votes while warning the country would need to "find 10 Brazils to pay." Congress had already loosened election-season spending rules in May, and Lula is sparing no expense to engineer a feel-good economy.

The bills may not survive the courts; Justice Gilmar Mendes called mandatory spending without a funding source potentially unconstitutional. But with gross debt past 80% of GDP and the rate at 14.5%, this week's generosity lands on a Treasury already stretched thin.

New poll, similar results

A new Nexus poll points the same way as recent surveys from other institutes: President Luiz Inácio Lula da Silva is widening his lead over far-right Senator Flávio Bolsonaro. In the first round, Lula now draws 42% (up from 40%) to Flávio's 33% (down from 35%). In a runoff, the president's margin has stretched from a single point in late April to six now.

The race is still a toss-up, and with four months to go, much can scramble the field again. But the trend favors the incumbent.

Discontent with the frontrunners has never been higher — 24% of voters want someone else (up from 11% in late March). Yet without a competitive alternative, that frustration has nowhere to go, and the contest stays boxed between Lula and Flávio.

Big Tech will have 60 days to comply with new internet rules

he Supreme Court reached a majority to give the world's largest internet platforms 60 days to comply with a ruling that has rewritten how Brazil governs online speech. The grace period is one-third of what the platforms sought, and arrives alongside two late-May decrees updating Brazil's internet bylaws.

The clock starts once the court certifies the trial, which decides appeals filed after a June 2025 ruling found Article 19 of Brazil's 2014 internet framework — often likened to Section 230 of US law — partly unconstitutional. That provision had shielded platforms from liability for users' posts absent a court removal order.

Platforms must now remove a defined set of serious illegal content — antidemocratic acts, terrorism, racism, child sexual abuse imagery, human trafficking — the moment they are notified, no judge required. Fail to act, and they can be sued. The ruling also presumes liability for paid ads and bot networks, and orders foreign platforms to keep a legal representative on Brazilian soil — the same demand that led Justice Alexandre de Moraes to ban X for 38 days in 2024.

OTHER STORIES WE’RE FOLLOWING

Another Bolsonaro trial

A Supreme Court panel opened today the trial of former Congressman Eduardo Bolsonaro, who is accused of trying to coerce Brazil's judiciary. Eduardo moved to the UÍ early in 2025 and lobbied the White House to sanction Brazilian officials and pressure the country's Supreme Court — a failed bid to keep his father, former President Jair Bolsonaro, from being convicted of attempting a coup.

A last rate cut in sight?

Brazil's headline inflation slowed to 0.58% in May from 0.67% in April, the statistics agency IBGE reported this morning. The 12-month IPCA — the gauge that guides monetary policy — hit 4.72%, breaking past the upper limit of the Central Bank's tolerance band (4.5%) for the first time since October 2025. Analysts polled by Bloomberg had pegged the median at 0.53% — a small miss, but in the wrong direction.

The Central Bank decides on rates Wednesday. Markets expect a quarter-point cut to the 14.5% Selic, followed by a pause, as inflation pierces the top of the target band and forecasts keep deteriorating.