Brazil's Deputy Finance Minister Dario Durigan acknowledged that if Congress approves new spending, the government will face challenges that could hamper efforts to meet its key goal of zero deficit in 2024.
Durigan said in an interview published Wednesday that the government is working to ensure that the budget approved for 2023 has “the correct balance of revenues and expenditures.” But “other issues” currently being discussed in parliament could mean “the plan” originally approved by lawmakers cannot be implemented.
These include a potential reduction in payroll taxes for local governments, a tax relief package for sectors related to hotels, events, bars, restaurants and theaters that passed the House of Representatives on Tuesday, and a payroll tax cut currently being debated on the Senate floor. Includes an increase bill. Salaries of judges and prosecutors. The proposed tax cuts for the events sector, known as Perce, were capped at a total of 15 billion reais (US$2.9 billion) until the end of 2026.
Last week, the government announced details of the Budget Directives Act 2025 (LDO). The bill lowers the projected fiscal surplus for 2025 from the 0.5% surplus of gross domestic product (GDP) previously predicted in the budget law enacted this year to a zero deficit target.
This bill was a further change in fiscal objectives by the Luiz Inacio Lula da Silva government. Since the fiscal framework was approved in August 2023, the government has taken steps to increase spending space.
Back in January, the Federal Court of Accounts, which oversees public spending, said Brazil could run a 55 billion reais (US$10.6 billion) deficit this year rather than meet its target of zero primary deficit. announced a calculation report showing that there is a This was before discussions began in earnest on issues such as tax cuts for the events sector and better pay for judges.
Durigan added that the government needs about 50 billion reais (US$9.6 billion) next year to reach its zero-deficit target and will aim to approve measures in line with that goal this year.
