Brics member Brazil plans new fiscal target for 2025
The government is said to be aiming for a primary surplus equal to 0.1% of GDP
14 April 2024 - 15:53
byMarcela Ayres and Bernardo Caram
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Brasilia — Brazil’s government is preparing a new fiscal target for 2025, aiming for a primary surplus equal to 0.1% of GDP, two sources with direct knowledge of the matter says.
Speaking on condition of anonymity because the discussions are private, the sources said on Friday there has been no final decision, but the government intends to loosen the target from the 2025 surplus of 0.5% of GDP it had suggested in 2023.
The government will set the new target in the budget guidelines bill, which must be sent to congress by April 15. The planning and finance ministries said on Friday it had postponed the bill’s presentation to the press to Monday at 4.30pm local time, shifting from an earlier morning announcement.
The ministries did not immediately respond to a request for comment.
According to both sources, the government is also expected to indicate that a primary surplus of 1% of GDP, previously projected to be achieved in 2026, will now be postponed to 2028.
In practice, this extension will imply a longer period for stabilising Brazil’s growing public debt. Considered the country’s primary solvency indicator, the gross debt rose to 75.5% of GDP in February, up from 71.8% a year earlier.
Government officials had already suggested this week that the target should be relaxed, stressing the government will still seek an improvement compared to the official goal of eliminating the primary deficit in 2024.
When President Luiz Inacio Lula da Silva introduced a fresh fiscal framework in 2023, constraining spending growth to 70% of revenue increases while permitting a minimum expansion of 0.6% and a maximum of 2.5% above inflation annually, it mandated the ongoing pursuit of primary budget targets alongside these regulations.
The left-wing government also established a range for achieving the fiscal target, which, starting this year, has a tolerance margin of one-quarter of a percentage point on either side.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Brics member Brazil plans new fiscal target for 2025
The government is said to be aiming for a primary surplus equal to 0.1% of GDP
Brasilia — Brazil’s government is preparing a new fiscal target for 2025, aiming for a primary surplus equal to 0.1% of GDP, two sources with direct knowledge of the matter says.
Speaking on condition of anonymity because the discussions are private, the sources said on Friday there has been no final decision, but the government intends to loosen the target from the 2025 surplus of 0.5% of GDP it had suggested in 2023.
The government will set the new target in the budget guidelines bill, which must be sent to congress by April 15. The planning and finance ministries said on Friday it had postponed the bill’s presentation to the press to Monday at 4.30pm local time, shifting from an earlier morning announcement.
The ministries did not immediately respond to a request for comment.
According to both sources, the government is also expected to indicate that a primary surplus of 1% of GDP, previously projected to be achieved in 2026, will now be postponed to 2028.
In practice, this extension will imply a longer period for stabilising Brazil’s growing public debt. Considered the country’s primary solvency indicator, the gross debt rose to 75.5% of GDP in February, up from 71.8% a year earlier.
Government officials had already suggested this week that the target should be relaxed, stressing the government will still seek an improvement compared to the official goal of eliminating the primary deficit in 2024.
When President Luiz Inacio Lula da Silva introduced a fresh fiscal framework in 2023, constraining spending growth to 70% of revenue increases while permitting a minimum expansion of 0.6% and a maximum of 2.5% above inflation annually, it mandated the ongoing pursuit of primary budget targets alongside these regulations.
The left-wing government also established a range for achieving the fiscal target, which, starting this year, has a tolerance margin of one-quarter of a percentage point on either side.
Reuters
EDITORIAL: Zelensky’s African safari
NICHOLAS SHUBITZ: Brics’ own credit ratings agencies could avert high debt servicing costs
JOHN DLUDLU: Brics+ needs common values, not anti-West rants
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Elon Musk berates Brazil court over order to block some X accounts
UN climate chief warns global plans are losing urgency
Bolivia rejects Argentina gas supply to Brazil
Brazil partners with largest climate finance alliance
Brazil’s Lula spotlights Global South
IMF urges G20 economies to rebuild fiscal buffers
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.