Right-wing presidential frontrunner Flavio Bolsonaro's plan to cut up to BRL200bn ($40bn) in public spending has cheered investors ahead of Brazil's October 25 runoff, but analysts and ratings agency Moody's said the package may not be enough to stabilise the country's spiralling debt.

Bolsonaro's advisers have floated a "reverse" transition amendment, to be passed between the election and the inauguration, Valor reported. It would contain nine to 10 spending cuts worth around 1.5% of GDP.

Investors treated the proposals as a "game changer" when accounts of a meeting with economic adviser Luiz Felipe Trevisan circulated in market WhatsApp groups, the newspaper said.

According to Valor, the cuts would come from within the public sector and would initially avoid pension reform or reductions to social benefits. Instead, they would focus on administrative reform, fewer ministries and appointed posts, a review of civil service pay scales and fraud prevention.

Trevisan also reportedly raised ending presidential re-election as a bargaining chip to win over the centre-right bloc known as the Centrao.

Market interest rates have fallen by more than 1 percentage point since Bolsonaro led the first round on October 4. But at around 7%, they would still require a primary surplus of 3.25% of GDP to stabilise gross debt, according to a Valor analysis.

Gross debt stands at 82.9% of GDP, having risen 4.2 percentage points between January and August alone, the newspaper said.

Bolsonaro's campaign has not set a primary surplus target. The government ran a structural deficit of 1.4% of GDP in June, according to the Independent Fiscal Institution (IFI), which means that the BRL150-200bn adjustment of 1.1-1.5% of GDP mentioned by advisers would help but not solve the problem, Valor said.

The newspaper added that the campaign has not committed to structural measures, such as decoupling social security benefits from the minimum wage or a new pension reform. A promised sale of more than BRL1 trillion in federal assets could cut gross debt to 75% of GDP, but economists doubt it can be done quickly.

Moody's, which rates Brazil Ba1 with a stable outlook, said whoever wins will inherit a much weaker fiscal position, adding that stabilising debt would require a primary surplus of 2-3% of GDP, compared with the current primary deficit of about 0.5%.

The agency said a Bolsonaro government would likely pursue deep spending cuts and a debt-reduction rule, but there were few details on how he would deliver them.

"Without legislative support from Congress, the next government would have limited capacity to deliver a significant reduction in public spending," said Moody's.

Meanwhile, a second term for incumbent left-wing President Luiz Inacio Lula da Silva would likely keep the current fiscal framework and narrow the deficit only gradually, the agency added.