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On Oct. 4, Brazilians will vote in the first round of a presidential election with two clear front-runners who appear to be opposites. Incumbent President Luiz Inácio Lula da Silva is running on a platform of economic populism, social liberalism, and political stability. His main challenger, Sen. Flávio Bolsonaro, is campaigning as the torchbearer of the socially conservative movement that his now-convicted father, President Jair Bolsonaro, launched in 2018.

Despite these competing visions, both candidates are unlikely to solve Brazil’s core issues: anemic long-term growth and entrenched corruption. Hastening growth requires structurally lower interest rates, which means deep fiscal reform. Addressing corruption and impunity, meanwhile, would require a wholesale reappraisal of Brazil’s post-dictatorship justice system.

On Oct. 4, Brazilians will vote in the first round of a presidential election with two clear front-runners who appear to be opposites. Incumbent President Luiz Inácio Lula da Silva is running on a platform of economic populism, social liberalism, and political stability. His main challenger, Sen. Flávio Bolsonaro, is campaigning as the torchbearer of the socially conservative movement that his now-convicted father, President Jair Bolsonaro, launched in 2018.

Despite these competing visions, both candidates are unlikely to solve Brazil’s core issues: anemic long-term growth and entrenched corruption. Hastening growth requires structurally lower interest rates, which means deep fiscal reform. Addressing corruption and impunity, meanwhile, would require a wholesale reappraisal of Brazil’s post-dictatorship justice system.

Brazil’s problem is not an inability to reform. It is the country’s inability to institutionalize those changes into lasting solutions. The country has passed legislation attempting to address slow growth and corruption multiple times since redemocratization in the 1980s, but in most cases, politicians either later watered down those reforms or rolled them back entirely.

Brazil is trapped in a cycle of crisis, reform, and backsliding. Breaking out of this cycle is possible, but only if the country can overcome the fragmented political landscape that makes it difficult for voters to attribute policy outcomes to the politicians responsible for them.

Brazil has high levels of sovereign debt, facing steep borrowing costs from lenders. These higher rates propagate through the financial system and raise the cost of investment, which in turn slows growth.

The painful recessions that followed Latin American sovereign debt defaults in the 1980s are a reminder of the kind of danger that Brazil is flirting with by allowing high debt levels. In response to that upheaval, peer countries such as Chile, Colombia, and Peru enshrined rules that strictly limited deficits. This reduced the inflationary impulse and investor risk, allowing for structurally lower interest rates.

Brazil’s reform response was shallower, eventually forcing it to seek out the International Monetary Fund (IMF) for relief in 1998 and 2002.

In the........

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