Brazil’s Congress Approves 2025 Budget Bill with Higher Surplus Projection

Brazil’s Congress approved a 2025 budget bill forecasting a primary surplus of 15 billion reais. The upward revision reflects increased revenue projections. The bill awaits President Lula’s signature to become law, incorporating significant changes to social benefit expenditures amidst challenges in congressional relationships.

On Thursday, Brazil’s Congress approved a budget bill for 2025, anticipating a primary surplus of 15 billion reais ($2.66 billion), an increase from the previously estimated surplus of 3.7 billion reais in August. This upward revision of revenue projections is expected to enhance the country’s primary balance forecasts. Once signed into law by President Luiz Inacio Lula da Silva, these changes will take effect.

The budget bill was introduced by Senator Angelo Coronel, who noted that the adjustments were made based on requests from the federal government. Notably, these include increased funding for social security benefits while simultaneously reducing expenditures on the Bolsa Familia welfare program, which provides monthly cash support.

In 2023, President Lula implemented a new fiscal framework which aims for a primary balance target and caps spending growth at 2.5% above inflation. For 2025, the government has set a target of a zero primary deficit, allowing a margin of 0.25% of GDP, which equates to a potential deficit of up to 30.9 billion reais while remaining compliant with the fiscal rules.

While it is customary for the annual budget bill to secure approval before the end of the preceding year, this year’s delay highlights the difficulties faced by President Lula’s leftist administration in navigating relations with Congress effectively.

The approval of Brazil’s 2025 budget bill illustrates a significant upward adjustment in the projected primary surplus, reflecting improved revenue forecasts. With critical changes to social expenditure and fiscal targets set by the new framework, the administration faces ongoing challenges in establishing a productive relationship with Congress. The successful passage of this bill is pivotal for maintaining fiscal stability in the coming years.

Original Source: www.tradingview.com