Brazil’s Congress has approved a 2025 budget projecting a primary surplus of 15 billion reais, an increase from August’s 3.7 billion. The bill now requires President Lula’s signature to take effect, reflecting fiscal adjustments in response to governmental requests amid a challenging legislative environment.
Brazil’s Congress has approved the 2025 budget bill, projecting a primary surplus of 15 billion reais (approximately $2.66 billion). This figure marks a substantial increase from the 3.7 billion reais projected by the government in August. The improvement stems from upward revisions in revenue projections, which have positively influenced the estimated primary balance.
The bill, presented by Senator Angelo Coronel, now awaits signature from President Luiz Inacio Lula da Silva to become law. In 2023, President Lula introduced a new fiscal framework aimed at combining a primary balance target with a ceiling on spending growth, set at 2.5% beyond inflation, reflecting his administration’s economic policy goals.
For the current year, the target stipulates a zero primary deficit, permitting a margin of 0.25% of the gross domestic product (GDP). This allowance implies that the government could incur a deficit of up to 30.9 billion reais while adhering to the fiscal regulations.
Senator Coronel conveyed that he reflected changes requested by the federal government in the budget bill. This includes increased allocations for social security benefits and a reduction in funding for the Bolsa Familia welfare program, which grants monthly cash transfers to eligible families.
Typically, Brazil’s annual budget bill is passed before the close of the previous year; however, the significant delays in 2023 highlight the ongoing challenges faced by President Lula’s leftist government in navigating its relationship with Congress.
The approval of Brazil’s 2025 budget bill signifies a positive shift with a projected primary surplus of 15 billion reais, reflecting revised revenue forecasts. President Lula’s fiscal framework aims for fiscal responsibility but has encountered challenges in Congress, evident in the delayed passage of the budget. Adjustments made to the budget address federal government requests but also indicate a delicate balance between welfare spending and fiscal targets.
Original Source: www.tradingview.com
