Brazil’s Senate was due to vote on Thursday on a Complementary Bill containing fiscal adjustment measures proposed by President Luiz Inácio Lula da Silva’s government. The government says the package has an impact of up to R$60 billion. Senator Eduardo Braga, who is rapporteur of the text, said the bill is one of two pre-conditions for voting the budget.
What the bill would do
The bill caps spending growth at 2 percent a year above inflation if revenue falls short, and the government would be required to freeze expenses. Only discretionary expenses can currently be frozen. The project extends that power to mandatory expenses not written into the Federal Constitution, which economist Felipe Salto put at R$388 billion in 2026. Under the trigger, the real spending growth limit falls by 0.5 percentage points from 2.5 percent.
The text also removes extraordinary oil and gas revenues from the calculation of the constitutional health floor, in cases of deficit or surplus. Companies could use no more than 80 percent of a tax credit, and some tax benefits could be cut by as much as 20 percent. Congress would have 120 days to approve a proposal regulating supersalaries.
Targets and the budget link
Of that, R$50 billion would build a buffer to meet fiscal targets, and around R$10 billion would go to the general budget rapporteur to incorporate expenses. The government wants the bill approved so that items such as the university pé-de-meia programme can be included.
The centre of the 2027 fiscal target is a primary surplus of R$73.2 billion, or 0.5 percent of GDP. The floor is R$36.6 billion. Ministry figures put the trigger’s additional fiscal effort in 2027 at R$12.8 billion.
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