Brazil’s government has negotiated a fiscal adjustment bill equal to 0.5 percent of gross domestic product for 2027, to be presented in the coming days by an allied senator, a government source said.
Scope of the adjustment
The measure would strip extraordinary revenues out of the calculation used for constitutional minimum spending on health and education, applying the restriction even when the government posts a fiscal surplus. Under current rules, that restriction applies only in case of a deficit. Cuts to tax benefits are also under negotiation, the source said, without giving details.
The adjustment is estimated at between 70 billion and 80 billion Brazilian reais for 2027. Officials are framing it as part of a broader, multi-year effort: a cumulative fiscal adjustment of 1.75 percent of GDP is planned over four years. The bill marks a first concrete step toward demands from economists and financial market participants for tighter control of public debt.
Lula’s broadcast pledge
President Lula da Silva, in a national broadcast address on Sunday, reaffirmed his commitment to fiscal responsibility. He said public debt and high interest rates concern him, and that the government will act to create conditions for reducing the Selic rate, currently set at 13.75 percent a year.
The pledge comes against a difficult market backdrop. Since Lula’s re-election, the dollar has risen sharply against the Brazilian real, while the Ibovespa stock index has fallen markedly. The bill was first reported by the outlet G1.
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